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IVAs are `helpful but should not be taken lightly`

01/05/2008

Individual Voluntary Arrangements (IVAs) offer a way out of severe debt problems but should not be entered into without much thought beforehand, according to a report.

Writing in the Independent, expert Julian Knight said both IVAs and payment protection insurance - which have both had their critics - can help people out with major financial situations.

However, he noted that professional debt advice should always be sought before signing up to an IVA and such a method of sorting out debts is "risky".

John Tegg, managing director at insurance firm DMS, told the newspaper: "IVAs last up to five years and are a major lifestyle commitment.

"Can you imagine if you made all your IVA payments for four years and then got ill or were made redundant and the IVA failed as a result?"

An IVA is an agreement between the debtor and their creditors, in which a portion of the debt is agreed to be paid over a five-year period. After that period has elapsed, the debt is written off.

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