IVAs

An IVA is a way of reducing your debts to a manageable level, without having to go bankrupt or take out any additional credit, in most cases some of your debt is written off. It is a quick and easy way to help you become debt free.

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.

 

Individual Voluntary Arrangement (IVAs) Explained – How it works

A Debt Advice Organisation along with an insolvency practitioner will prepare, negotiate and administer an arrangement for you to voluntarily repay your creditors. This may be done by using your spare income, a lump sum or other assets that you own.

If you have surplus income after meeting your essential household and personal expenses or have assets that can be used to pay your creditors or have access to a lump sum, for example from a relative, you may then

consider entering into an Individual Voluntary Arrangement (IVA). Doing this will protect you from recovery action that your unsecured creditors may take, and will usually involve your creditors writing off part of what you owe them. A proposal for an IVA will only be approved where enough creditors vote in favour.

The person you choose to supervise your IVA must be licensed and regulated under insolvency law as an insolvency practitioner.

 

Debt Free IVA

Reduce your debt payments

Debt Free IVAFreeze your interest and charges

Debt Free IVA

Write off most of your debt

Debt Free IVA

Stop letters and phone calls

Debt Free IVA

Stop legal action and bailiff visits

 

Pros

  • Creditors who vote against your proposal are still bound by it.
  • Creditors whose lending is unsecured can’t take any further action.
  • Interest is usually frozen as long as you keep up your payments.
  • Your insolvency practitioner will help you prepare your proposal, including agreeing the level of your household and personal spending based on guidelines acceptable to creditors.
  • Many insolvency practitioners will allow you to pay their fees for preparing your proposal monthly, as part of the IVA.
  • You make only a single payment each month or quarter. Your insolvency practitioner is responsible for administering and distributing your payments.
  • The terms of an IVA will usually enable you or your spouse or partner or a relative to make arrangements to buy your share of the net worth of your home or to make extra payments, rather than the home having to be sold. This may be done through a remortgage or a loan. (Net worth means its value after any debts secured on it have been paid.)
  • On completion of the IVA, the balance of what you owe your creditors is written off.
  • You may be able to continue running any business you have.
  • Your IVA is entered on a public register.
  • The insolvency practitioner may require payment in advance for preparing your proposal and getting your creditors’ agreement.
  • If there is some equity (value) in your home after taking account of the mortgage(s) on it, you will probably have to pay for your share, usually in the fifth year of your IVA, by remortgaging the property. If you can’t get a remortgage, you may have to continue making monthly or quarterly payments from your income, for up to another year.
  • If your circumstances change, and your practitioner can’t get creditors to accept amended terms, the IVA is likely to fail. You will then 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, you may be made bankrupt.

Cons

  • Your IVA is entered on a public register.
  • The insolvency practitioner may require payment in advance for preparing your proposal and getting your creditors’ agreement.
  • If there is some equity (value) in your home after taking account of the mortgage(s) on it, you will probably have to pay for your share, usually in the fifth year of your IVA, by remortgaging the property. If you can’t get a remortgage, you may have to continue making monthly or quarterly payments from your income, for up to another year.
  • If your circumstances change, and your practitioner can’t get creditors to accept amended terms, the IVA is likely to fail. You will then 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, you may be made bankrupt.

 

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