If you have never heard of IVAs before, you may be interested to find out that they are a way of reducing your debts to a manageable level, without having to go bankrupt or take out any additional credit. If you have £15,000 or more debt owed to more than 2 companies, then an IVA may be the right option for you.
IVA stands for Individual Voluntary Arrangement and is a legally binding agreement between you and your creditors to pay back the money you owe with an affordable monthly repayment over a period of (usually) 5 years. The single, affordable monthly IVA repayment is based on your disposable income and budget.
During the period of the IVA, your creditors must freeze any interest on the debts, and they are not allowed to pursue the debt, or instigate any legal action to recover it.
At the end of the IVA, assuming all the requirements of the IVA have been satisfactorily met, all of the debts are cleared and effectively written off and you become debt free.
- Avoid bankruptcy
- Consolidate your debts into one reduced monthly repayment
- If the IVA is approved your creditors must freeze interest and charges on your debts.
- If the IVA is approved your creditors cannot take further legal action to recover the debt as the IVA arrangement is legally binding, providing you keep to the terms of the arrangement.
- Your creditors will not be allowed to send you letters or telephone you.
- All your unsecured creditors will be legally bound by the IVA.
- Your payments are based on what you can afford to pay not the size of your debts.
- It will not affect professions such as the Police Force or Armed Forces, neither will it impact on your ability to hold public office or act as a company director.
- You must adhere to the set budget for the term of the arrangement (usually five years).
- All assets and liabilities must be declared. If you own assets of excessive value, the creditors can ask for these to be sold.
- You may be asked to release some of the equity on your property in year 4 of the IVA. An offer a remortgage may be on less favourable terms and your ability may be restricted
- 75% of creditors must agree to the proposal for approval of the IVA.
- Any windfalls, inheritances or bonuses must be declared.
- All Individual Voluntary Arrangements are recorded on a public register and are likely to appear on your credit file.
- If an IVA fails, then there is a risk that either the creditors or the Insolvency Practitioner will petition for your Bankruptcy.
Humber Debt Solutions will complete the initial assessment with you to determine your suitability for an IVA. NTF Financial Solutions are the Insolvency Practitioners that will process and supervise your IVA with whom we have a commercial relationship. Fees apply and these will be explained fully by the Insolvency Practitioner on assessment.
The insolvency service has produced a guide for people who are struggling with debt, which outlines each of the available solutions.
For further information please view the frequently asked questions page or complete the contact form on the right.