What is an IVA | Do I qualify for an IVA | How do I start an IVA | The IVA process | Pros and cons IVA

IVA or Individual Voluntary Arrangement UK, Government approved schemes

When it comes to dealing with our debts we are all a little tentative, but when your debts start to get out of control it all starts to become very daunting and having someone who is not emotionally involved to explain your options can be invaluable. An IVA or Individual Voluntary Arrangement is one way to legally clear your debts without all the hassle and heartache that can be present when you just try to muddle through it all.

We have laid out in simple terms below what an IVA is and how it works in normal circumstances.

What is an IVA?

An IVA or Individual Voluntary Arrangement is a formal agreement to make reduced payments towards your debts between you and your creditors (people you owe money to) as an effort to pay off a percentage of what you owe and is normally classed as settled after five years. An IVA has to be set up by a licensed insolvency practitioner.

The agreement is based on an affordable payment from your disposable income and once the last payment is made, any outstanding debt is legally written off and creditors cannot demand further payments.

Do I qualify for an IVA

IVAs or Individual Voluntary Arrangements can be used by anyone to solve their debt problems. It doesn’t matter whether you are a professional, a manual worker or a member of the private or public sectors, IVAs have been put in place for anyone to use so your job or profession does not affect whether you qualify or not.

What does matter however, are your personal circumstances. Your personal debts must normally amount to more than £15,000 owed to more than three creditors. A reasonable, regular monthly payment is expected which will obviously depend on the debt owed and your disposable income. As a guide, you will usually need to be able to afford at least £250 per month.

What do I do to start an IVA?

An Individual cannot propose an IVA to their creditors on their own. The law says you must use the services of an Licensed Insolvency Practitioner. The help they can give will make the whole process alot simpler anyway.

The IVA process

First you need to decide whether an IVA is actually what you need or if it’s right for you and your circumstances. Before you decide you should speak to one of our advisors. Call our FREE IVA helpline (0800) 018 3345.

Once you have decided that an IVA is right for you, you should meet with your Licensed Insolvency Practitioner to review your entire financial situation. Between you, you will work out how much you are able to offer your creditors and whether the IVA is likely to be accepted. If the practitioner agrees that the IVA is right for you then a statement of affairs will be drawn up.

A formal written proposal should then be drafted for your creditors. This will normally detail all of your debts and the background to them. You will have to sign this document agreeing that it represents the very best offer that you can make to your creditors.

This proposal will then be sent to all your creditors which they may accept without modification or they may request a modification to be made.

Next, a creditors meeting is organised which is an opportunity for all the creditors to discuss your proposal. As long as 75% of the value of the creditors accept, then the proposal becomes legally binding on all creditors.

The court and all creditors are formally informed of the result of the meeting and your practitioner is normally appointed as the supervisor of the Arrangement. He or she will monitor the monthly payments you make, supervise the disposal of any assets and fulfil any other requirements of the creditors.

All you have to do then is maintain your monthly payments into the IVA for what is normally 5 years. Once these and any other terms of your arrangement have been fulfilled, you will be completely free from your debts.

The pros and cons of IVAs

IVA PROs
You will be debt free in 5 years
All telephone calls and payment demands are stopped
All interest and late payment charges are frozen
You will only pay one single monthly payment
An IVA is a fixed, legally binding agreement
You are protected from court action unlike with debt management UK
Your professional status is unaffected

IVA CONs
You may have to release some of the equity you may have in your home
To get an IVA you must have a minimum level of debt
You cannot have any unsecured borrowing during the arrangement
You credit rating will be affected

If there is anything further you may wish to know or you need to have something explained at greater length than we have done here, please call one of our advisors FREE today.

Don't wait, call free on (0800) 018 3345 now