You only pay back a percentage of your debts. If you follow the agreed terms, you will be debt free in 5 years time.

Up to 75% of your debt may be written off.

This is a legally binding solution so no further interest or charges can be added to the debt. Enforced by law, creditors can’t change their mind once they’ve agreed. You also get protection against possible court action.

Your contributions are based on your ability to pay. Agreed monthly payment plans will remain fixed unless your income level dramatically increases.

It is a private agreement – only you, your advisor and your creditors need know about it. There is no publicity in the local papers, as is the case for bankruptcy.

You can continue to practise as a professional person (i.e. accountant, solicitor, doctor, policeman, armed forces etc) or as a director of a company and can hold public office, as an IVA does not affect your professional status.

You can open a regular bank account, without an overdraft facility and have no/fewer credit restrictions than if you go bankrupt.

You can safeguard your property, as the proposals can be made flexible to suit personal circumstances.

All assets must be declared. If you have equity in your house, an endowment policy linked to your mortgage, or valuable assets you may be required to release them to pay your creditors.

Normally, an IVA cannot be used if your total debts are under £15,000. To gain approval, creditors representing at least 75% of the value of the money owed, as well as a simple majority, must agree to the proposed arrangement.

You must be able to afford to make an offer of repayment to your creditors. Generally you need a suitable income to be able to afford monthly payments of £200 or more.

If you fail to keep up the payments, your creditors will be able to take other action against you, which could result in bankruptcy, and your home could still be at risk.

All IVAs are recorded in a public register and will appear on your credit file. This could affect any future applications for credit.

You cannot to obtain further borrowing during the 5 years under the terms of the IVA.

If you enter into an IVA and get a sudden windfall e.g. a win on the lottery, inheritance etc you will be required to pay the money owed to your creditors.