According to some reports, U. S. national debt level is reported to exceed $27 trillion, which is more than the country’s annual economic output. This shows that the debt issue is a serious problem that can hinder the financial stability of an individual as well as slow down the growth of an economy. Therefore, clearing these debts is extremely crucial.

If you have unmanageable debts, it is natural for you to feel stressed and anxious. Before this debt gets out of your control, you should find ways to effectively manage debts. If you are feeling overwhelmed by the debt crisis, you may think of applying for an Individual Voluntary Arrangement (IVA) to pay off all your debts. But before considering IVA, you must make sure it is the right option for you. You must know how much debt you have, how to apply for an IVA, how an IVA will impact your home, whether you can afford it, and see if you will be able to manage your entire financial obligation after you spare money to pay for IVA.

So, if you are considering IVA as a way to manage your debt, you can look into this guide and see if it is the right debt management solution for you.

Understand how much debt you have

The first thing to effectively manage your debts is to understand how many debts you have. If you have a debt of more than $10,000, you can consider IVA. But if your debt is less than $10000, it is better to consider other options due to higher fees.

See if you have spare money to pay for IVA

If you want to pay for IVA, you should be able to make some spare money to pay your creditors monthly. You should have some spare money; otherwise, your creditors won’t be accepting your proposal for IVA. But your advantage of IVA is that they are very flexible. For instance, even if you do not have much spare money but have something to sell, then you can sell it to raise money and pay the creditors with this lump amount. Your insolvency practitioner can help you find the suitable and most realistic amount that you can pay. But whatever happens, make sure that you agree to money that you can afford.

What to do if you have a lump sum of money

You may be having a lump sum of money with you, for instance, the money given to you in a will. This amount will also be included in your IVA. So, you will have to pay your creditors with this money monthly. But if you are over 55 and you need that money to live in your retirement, IVA can leave you with less money. Therefore you should try to talk to a financial adviser, before taking the money that you kept for your retirement to pay your debt.

How much does an IVA cost?

In the case of IVA, unlike bankruptcy and other options, there are no fixed charges. IVA fees will mostly be decided by the size of your debts and will be mostly decided by your Insolvency prosecutor. It is better to take time to understand the options that are affordable for you. Before committing to an IVA, learn how much you will have to pay with the consultation of a prosecutor.

Check how IVA will affect your life

Before committing to an IVA, see how it will affect your life-check how your pension, salary, belongings, and saving will be affected.  Usually, your belonging won’t be affected by IVA.  But if you have some expensive things, like some antiques, you can consider selling them and paying for IVA. A high-value item like your home, car, or land will be considered your asset and can be included in IVA. You need to tell your insolvency practitioner all about your assets and they will tell you what should be included in IVA.

Even though IVA can be a lifeline to many of the debtors who are struggling with debt issues, you need to understand everything about it, before committing to it.