That is the reaction of some people on hearing that no further interest will be added, significant amount of debt will be written off and they be legally protected from any action by their creditors. And let’s face it – we are right to be wary, if not downright cynical. We live in scary days where nothing is necessarily what it seems.

But the reality is that hundreds of thousands of people in IVA’s are thrilled to be in a structured plan where the debt is under control and the end of debt is in sight. Anything up to about 90% of debt write off is certainly possible in an IVA.

And the question many ask is – why would creditors agree to this? And the answer is fairly straightforward. If the return creditors receive in an IVA is greater than they would in a bankruptcy situation, they are likely to agree to the IVA. They are after all looking for the best possible return.

Many people find that debt has run away from them, and they are unable to meet payments without incurring further debt, which of course simply exacerbates the problem. Faced with limited choices, an IVA may be the best way forward for the debtor, and might also be the best solution for the creditors. Of course it may not be. Homeowners with equity may find themselves unable to offer an IVA because creditors will feel they could receive a greater return in bankruptcy.

But for many (including homeowners) an IVA may sound too good to be true but is in fact just very good as a way out of unpayable debts.