An IVA can protect your property against charging orders and even bankruptcy. However, your home may be at risk if you do not maintain your creditor repayments.

An individual voluntary arrangement (IVA) offers considerable benefits for homeowners with serious debt problems. The agreement allows you to write off debt and become debt free in five years.

You no longer have to make normal payments to your creditors. This frees up your cash so that there will always be enough money to pay the mortgage each month.

An IVA is legally binding. Once it is in place, your creditors are no longer allowed to take legal action against you.

This means that you are immediately protected from the risk of your creditors taking out charging orders against your home. A charging order would secure a debt against your property thus reducing your equity.

Your IVA will protect you against getting any additional count court judgements. It will also stop any of your creditors from forcing you into bankruptcy which would definitely put your home at risk.

Releasing equity

An IVA is not a way of getting out of paying your debt. Creditors will write off debt for you, but only if they are sure that you are paying back as much as you possibly can over the five year plan.

As such, if you own property, your creditors will expect you to release equity from your home to increase the amount that they are repaid.

The normal procedure is to value your home in the fifth and final year of the IVA. If there is available equity, you will be required to release this by re-mortgaging.

If you cannot release the equity in your home because you are unable to get a mortgage, it is likely that your IVA payments will be extended to compensate your creditors.

What if your IVA fails?

As a homeowner, if your IVA fails, this could have extremely serious consequences.

If there is equity available in your house, you may be forced into bankruptcy. Were this to happen, your home would be sold to release the equity in it for your creditors.

For this reason, it is vital not to enter into an IVA unless you are sure that you will be able to maintain the agreed payments.

If you do not want to release equity from your home or are unsure that you can keep the necessary payments up, an IVA may not be for you.

The alternative debt solution to consider is a debt management plan (DMP) which will not require you to release equity from your property.

A DMP is also flexible meaning that your payments can go up and down.

However a debt management plan will not protect your home against charging orders and non of your debt will be written off automatically.

If you are a homeowner and struggling with serious debt, you should certainly consider and IVA. However, before entering into this type of solution it is vital that you get the right advice and understand all of the implications for your home.

If you are struggling with debt, visit www.beatmydebt.com

Our vibrant forum gives free access to industry experts and others who have suffered with debt problems.

Useful guides, calculators and information are also available designed to help you understand how to manage and resolve debt problems.