Debt Help - What is an IVA?

WHAT IS AN IVA - INDIVIDUAL VOLUNTARY ARRANGEMENT?

An IVA is an Individual Voluntary Arrangement, only available to residents in England & Wales established by government legislation as an alternative to help avoid the trauma of bankruptcy. It is often the best way to get out of serious debt and get your creditors (the companies you owe money to) off your back. Scottish residents click here to view useful contacts.

If you owe more than £10,000 (excluding your mortgage) and you or your spouse / partner have a regular income (excluding state benefits), an IVA could be the best debt solution for you.

An IVA is a legally binding repayment contract designed to protect you against any further action from your unsecured creditors (people you owe money to). Under the terms of an IVA, you agree with your creditors to pay back only what you can realistically afford based on your individual circumstances. No consolidation loans, interest payments or hassling phone calls. We will call you, listen carefully and review your situation. We will then recommend the best debt solution to suit your particular circumstances to help you combine all your credit cards, personal loans, catalogue and other debts into one affordable regular payment, without taking out more credit. However, an IVA will affect your credit rating and homeowners may need to re-mortgage.

This involves agreeing to pay that part of the debt which you can afford via regular single payments made each month over a fixed period (usually five years).

To do this all your creditors have to agree to consider your financial position, assessing what you, the debtor can and cannot afford to repay. 75% of creditors voting at the meeting to consider your IVA must be in favour of your IVA proposal. They can suggest changes to your IVA proposal and you have the choice to accept them or not. If your creditors do not approve your IVA proposal or any constructive alternatives you may consider other options open to you.

Your creditors generally accept a greatly reduced amount in full and final settlement of your debt. This is based on the proportion of debt they believe you can afford to repay and agreeing to write off the rest of your debts once the IVA has been successfully concluded. In addition they will also freeze all interest on your outstanding debts, stop charging penalty fees and chasing you for repayment. Once agreed, we supervise the whole process to make sure all parties stick to the terms of the IVA. Typically we reduce our clients' debts by between 50% and 60%, depending on their individual circumstances.

However, this form of debt reduction applies only where an IVA is accepted and adhered to in full. This relates to unsecured debts that were included within the IVA, as approved by the majority of your creditors and does not include any secured debts, for example mortgages or hire purchase. Repayments by you are paid into a bank account held by us on behalf of your creditors. This is then divided up among your creditors who accept the sum in full and final settlement of the total debt you owe them. Failure to adhere to the terms of the IVA may result in bankruptcy. An IVA will affect your credit rating for up to 72 months. Finally, homeowners may be required to remortgage.

What fees do you charge and who pays them?

Our fees are always agreed with you and your creditors in advance. Typically you will make an agreed monthly payment into the IVA for 5 years, our fees are deducted from this payment and the balance is repaid to your creditors. That is why our fees must be approved by your creditors as they reduce the overall sum they eventually receive. We negotiate with all your creditors on your behalf and set up the IVA for you. Once the IVA has been successfully concluded and all payments made, then the debt is legally written off and you are free of those debts forever!

 

Do you qualify? Check with our free debt assessment or call: 0800 177 7014

Click here to apply for an IVA.

Click here to read the terms & conditions.