17th July 2006

An Individual Voluntary Arrangement is a Government approved process which forms part of the Insolvency Act of 1986. It is a legal statutory debt help tool that can be used to help individuals that have become over-indebted. An IVA plays a critical role in the resolution of financial problems suffered by individuals who have over extended themselves in the UK credit market.

Not only does an IVA provide a workable solution to an particular debt problem it can also assist in the future rehabilitation of an individuals finances. The IVA is seen as a real alternative to bankruptcy and could be a best solution if you have a substantial amount of unsecured debt. It acts as a legally binding agreement between you and your creditors and can only be set up by a licensed Insolvency Practitioner. Features of an IVA include:

• Alternative to declaring yourself Bankrupt
• Unpaid balance of your debts is written off (up to 75%)
• One affordable monthly payment
• Legally binding way to reduce the amount that you owe
• Protects you from further action by your creditors
• You know how much you pay and for how long
• An IVA is between you and your creditors

The current legislation is due to be revamped with the Government looking into ways to make the IVA application process more simple. It is anticipated that these legislative changes will be introduced at the end of 2006 or early 2007.

Recently there has been a noticeable increase in the number of media, television, and print advertising from Debt Management companies promoting the IVA. This is because the IVA is now increasingly seen as a viable financial management option open to (employed) consumers with non-business generated debt problems. Further advice and guidance on Debt related matters can be obtained from the following resources:

Guide to Bankruptcy. This guide provided by The Insolvency Service tells you what happens if you are made bankrupt in England and Wales and about some of the alternatives to bankruptcy. The Insolvency Service operates under a statutory framework – mainly the Insolvency Acts 1986 and 2000, the Company Directors Disqualifications Act 1986 and the Employment Rights Act 1996.

If you are worried about your finances the Financial Services Authority (FSA) Debt Test will help you to find out whether you have - or are likely to have - problems with your borrowing, and importantly let you see how you would appear to a credit rating agency.

Plan your way out of debt with help from Directgov. Produced by the Central Office of Information, Directgov provides a simple easy to understand Debt Help Strategy for consumers:

• Avoiding over-commitment
• Budgeting
• Dealing with debt problems
• Which debts to pay off first
• Ways out of debt
• Consolidating debts