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 your Individual Voluntary Arrangement, 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.
A Debt Advice Organisation along with an insolvency practitioner will prepare, negotiate and administer an arrangement for you to voluntarily repay your creditors, this is what is known as an IVA. 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.