Banks and other lendersÂ seem to beÂ relaxing their payment thresholds for individual voluntary arrangements (IVAs) and are approving lower-repayment applications for the first time
Previously, only debtors able to commit to monthly payments of at least Â£200, paid over five years, were accepted, which is beyond the means of many people. In the past few months, though, creditors have agreed to hundreds of more flexible IVAs with monthly payments of under Â£200.
The main IVA selling point, as an alternative to bankruptcy, is that debtors are able to reduce their debts to a single monthly payment and have a legally binding agreement to become debt-free upon completion of the arrangement. From the creditors’ point of view they can claw back a proportion of what they are owed in a relatively short amount of time, and IVAs offer better returns for lenders than bankruptcies.
While lower monthly payments may be welcome to some debtors who would have been unable to meet a Â£200 payment,…
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