IVAs | IVA

What is an IVA? A good solution for debts over £15,000

An IVA, also known as an Individual Voluntary Arrangement, is a formal Debt Solution introduced in 1986, which allows you to avoid bankruptcy by paying off a portion of the debts that you owe and writing off the debts you cannot afford on completion. Due to an IVA being a formal agreement your creditors will be bound by it's terms.

IVA Advantages

1 easily affordable monthly payment based on your income and expenses.
Unlike some of our competitors, we do not charge any upfront fees; saving you £100's.
An IVA offers you protection from creditors.
Creditor pressure is stopped as creditors will have to deal with issues through us.
An IVA can be complete in as little as 1 year if you can offer a lump sum payment.
All interest is frozen immediately.
An IVA is suitable for tenants or homeowners, individuals or couples and even business owners.
We can set up an IVA in as little as 4 weeks.

IVA Disadvantages

If you are a homeowner with equity in your property you may be required to introduce part of your share of this equity in the final year of the arrangement. A remortgage may be restricted and on less favourable terms. If you can’t get a remortgage your arrangement can be extended for up to another year.
If your circumstances change, and your insolvency practitioner can’t get creditors to accept amended terms, the IVA is likely to fail. You will still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your IVA.
If your IVA fails, your creditors may request that you be made bankrupt. This will always be discussed before your arrangement commences
Your credit rating may be impacted for up to six years from the commencement of your IVA.

NOTE: In an IVA you will have an agreed budget for your living costs. There are allowances for this in the agreement. These expenses will be mostly based in what you currently have to pay out each month. You should declare all normal monthly expenses to your creditors so they understand your situation more clearly. There may be some restriction on some expenditure items, such as mobile phone for example.

Is an IVA the right choice for you?

An IVA is the right choice for you if

You have debts over £15,000
You have a surplus income each month (approximately £200+ after all your essential living expenses) , excluding any creditor payments (your new payment will include all your unsecured creditors)
You have 2 or more creditors (people you owe money to).

How does an IVA work?

When you first contact someone about an IVA, the first thing they will do is run through your circumstances to see if you qualify for an IVA. This will be general stuff like, are you a homeowner/renter?, are you single/couple/family?, are you employed/unemployed? etc... They will go through your monthly income and expenditure using a set of guidelines (aside from your debts) to determine exactly how much money you are left over with at the end of each month to pay your debts.

If you still look like an eligible candidate for an IVA after this and you have enough of a disposable income to put towards an IVA, our Insolvency Practitioner (IP) will put forward your proposal to negotiate with your creditors. If the IP thinks it looks like a successful IVA, then chances are your IVA will be accepted.
**Be warned. Do not pay any upfront fees for this service up to this point. Your IVA could fail and you will lose your upfront fee. There are companies that do not charge upfront fees. Contact us at Debt Advice to find out more.

If more than 75% by value of your crediors vote in favour of the IVA, then your IVA is approved and your reduced monthly payments towards a percentage of the total debts that you owe will begin.

How long does an IVA last for?

An IVA usually lasts for 60 months (5 years). In some circumstances however, an IVA can be completed in a few months, but this would normally involve introducing a Lump Sum into the IVA, hence the name Lump Sum IVA.

Some IVA arrangements can last more than 5 years to introduce payments in lieu of a remortgage (if applicable to your case). In exceptional circumstances a small number of arrangements can last more than 6 years. The length of time your IVA will last will be determined in the IVA proposal, once all of your circumstances have been taken into account.

For more information on IVAs contact our Debt Advisors on Debt Advice. You can call our lo-call Debt Helpline on 0800 043 5133 or fill in the form above.