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WHAT IS AN IVA?
IVA: Individual Voluntary Arrangement.
An Individual Voluntary Arrangement is a legally binding agreement between you and your creditors. The arrangement will normally last 5 years and during this period you will be expected to pay what you can afford outside reasonable living costs. An IVA has to be set up by a licensed professional called an Insolvency Practioner (IP). All unsecured debts must be declared into an IVA.


What is the Purpose of an IVA?
The IVA helps those in financial difficulties to make a formal proposal to settle their unsecured debt within a reasonable timeframe.

All interest and charges will be frozen to 0% and creditors will be prohibited from demanding additional payments.


How are the monthly payments calculated?
Monthly payments are based on what you can afford – this payment will be pre calculated before any agreement takes place and can vary during the 5 years depending on any fluctuations with your income and expenditure. Once the final payment is made, any outstanding debt is legally written off. The arrangement can write off a significant portion of your unsecured debt – in many cases more than 70%. Homeowners may be required to release equity at the end of the 5 years, however, your home is never at risk.


How does it work?
Once a decision has been made that an IVA is right for you (always seek professional advice from a reputable debt consultant) you will be required to undertake an assessment regarding your current financial situation. Based on the information you have given, a repayment amount will be calculated. For an IVA to be approved, creditors will be called upon to vote either for or against the arrangement.

The IVA will be legally binding. As long as you keep up the repayments, when the term of your agreement is finished, you will be free from these debts regardless of how much has been paid off.

During the period of your arrangement your financial situation will be reviewed annually to see if there has been any change in your circumstances.

Once the IVA is accepted the IP's role becomes that of supervisor, monitoring the IVA's progress and ensuring that the terms and conditions that were agreed to at the creditors meeting are properly adhered to.

It is your responsibility to pay the agreed payments to the IP who will then ensure that these payments are distributed to all creditors on a pro-rata basis until the successful completion of the IVA. It is in the debtors own interest to maintain their payments as failure to pay will almost certainly result in the failure of the IVA.

Upon the successful completion of the IVA you will be considered debt free. Any outstanding balances are written off..

It is worth noting that if you do enter into an IVA with your creditors and you have an endowment policy linked to your mortgage then you may be expected to cash it in and pay the proceeds into the arrangement. Likewise, if your property has a reasonable amount of equity then it is likely that some of it will have to be released during the arrangement (usually at the end) so it can be paid to the creditors. Drastic as this may sound it can be a deciding factor in whether an IVA is approved by creditors and a realistic way in which you can retain your property.


What Are the Differences between a DMP (Debt Management Plan) and an IVA?
• Although a DMP may greatly reduce your repayments each month, you will still have to pay all of your debt back. This could take a very long time. Example: A debt of £20,000 with reduced monthly repayments of £200 a month will leave you repaying your debt for at least 9 years.
• Your creditors do not have to stop adding interest and late payment charges. Some may for a short period (perhaps 6 months).
• Creditors may want to review the situation. This means that the reduced amount paid each month may only just cover the extra interest being added. If this is the case, then the debt will never be repaid.
• Your creditors can break the agreement at any time and asked for increased payments or add further interest.
• Not knowing where you stand with creditors, may have you always waiting for that next payment demand letter to come through the post.


Why use an IVA?
• You have an agreement with your creditors to make a single reduced payment each month.
• It lasts for a sensible period of time (normally 5 years).
• Once agreed, creditors are not allowed to add further interest or charges to your accounts by law.
• The agreement is fixed, meaning that creditors cannot randomly demand changes to it.


If you would like more information you can contact
The IVA Helpline 0800 876 0 999
or try the IVA Calculator.

You can also look at a selection of IVA companies by clicking here


ASK THE IVA EXPERTS A QUESTION:
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Reviews for IVA.co.uk
IVA.co.uk is rated 4.9 on a scale of 5 based on on reviewcentre.com.
Latest review:
So Glad We Did It - by , 19/09/2012
5/ 5stars
I have to admit to being less than keen to investigate the idea of an IVA as we had already gone down the route of a DMP with another company but this hadn't worked out. Hubby pushed for an IVA and started the ball rolling, however once we had started the process i soon realised how beneficial this would be. Andy Davie at Vincent Bond was fantastic, he went through the whole process with us fully and explained everyhing thoroughly. We are now almost 2 years in and haven't looked back.

iva.co.uk does not charge you any fees for use of our forum or the IVA Calculator, however we do get paid by our sponsors and the partners we work with. Our partners charge fees and those vary depending on the partner and the debt solution. Customers should refer to our partners' websites for more information regarding their services.

If you use the IVA Calculator we will pass your details on to one of our partners who will contact you and explain all the options available to you. They will then be able to help you set up a debt solution which is right for you.

Before entering into any debt solution you should ensure that you have considered the implications. Failure to keep up with repayments can result in bankruptcy or legal action. Lenders are not obliged to accept less in settlement of a debt than they are entitled to or to freeze interest or charges. Not all solutions involve debt write off and some solutions may result in the total amount payable increasing, or the period over which it is to be repaid increasing. Debt solutions affect credit ratings which record all financial activity for 6 years.

The debt solutions offered by our partners depend on your criteria and circumstances; including how much you owe and how many creditors you owe money to. You need to speak to a debt advisor to obtain a full assessment.