Figures show people in the UK owned £1.479 trillion at the end of May 2016. The average debt per household, which includes mortgages, was £54,740 in May. For many, these debts are manageable but for others it can be a problem, particularly if their circumstances change due to losing their job or a long-term illness, for instance.

The Debts That You Can Cover with an Individual Voluntary Arrangement (IVA)

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There are various ways of controlling debts and one way is to set up an individual voluntary arrangement which is a legally-binding agreement between the debtor and the creditors to pay back debts over a certain period of time. This has to be set up by an insolvency practitioner and it can be flexible. This arrangement can be used to pay of most debts.

Which Debts Are Covered?

Usually this arrangement is used for non-priority debts including:

•       bank loans and overdrafts

•       building society loans

•       credit cards and charge cards

•       store cards

•       personal loans

•       catalogues

It can also be used to pay off other outstanding bills, which are priority debts such as council tax, taxes, electricity or gas arrears.

You can also include secured loans which are debts secured against your home where the creditors can take your property from you if payments are not kept up. These can include secured loans, mortgages and rent arrears.

What to Do Next?

An individual voluntary arrangement is able to give you more control over your assets than if you were made bankrupt, according to Gov.UK. You have to make regular payments to your insolvency practitioner who then shares this money between the creditors. Your practitioner will work out what you can afford to pay each month and how long the agreement will need to be in place. Any amount of debt can be included but it is generally more than £10,000 and is usually only suitable if there are more than three debts with at least two creditors.

You can find out whether this is the best way forward for you by contacting a specialist company such as to discuss your arrears.

There are some debts which cannot be included such as maintenance arrears ordered by the court, child support arrears, student loans and fines from a magistrates’ court. These will need to be dealt with separately. Any joint debts are also unlikely to be suitable either.