With the help of a licensed insolvency practitioner (IP), you will work out the amount you can realistically afford to pay back over an agreed period of time – normally 3 to 5 years. At the creditors meeting your practitioner organizes, if 75% of your creditors agree, your debt and all the future interest will be frozen at the time that the IVA proposal is agreed. At the end of this period, any debt you could not afford to repay is written off. This is why you need to keep up with the negotiated monthly IVA payments. Typically, you will repay around half of what you owe, depending on your circumstances up to 70% of your debt may be forgiven. Once you enter an IVA, your creditors have to freeze interest and charges on your debt.
If you own a house that is worth more than the mortgage, then you will be probably asked to contribute from that towards the end of the IVA. However, you will not be asked to sell your home. The additional mortgage cost will be deducted from the IVA payment so you never pay more than you can realistically afford.
As long as you are confident you can maintain your regular monthly payment, then an IVA could be the solution for you and you could be debt free in 5 years or less. If you have debt of over £10,000, then an Individual Voluntary Arrangement widely could be right for you. An arrangement could allow you to avoid bankruptcy proceedings and reduce your monthly repayments by up to 70%. You do not have to deal with your creditors in person; your IP will negotiate in your behalf.