Individual Voluntary Arrangement (IVA) Debt Solution
What is an IVA?
An Individual Voluntary Arrangement (IVA) is an agreement with your creditors that helps you avoid bankruptcy, pay off only a proportion of your unsecured debts, and stops creditor demands for money. Normally lasting for 5 or 6 years, an IVA will enable you to pay some of your debt back, after which time all remaining debt is written off.Read about what is an IVA in detail
Eligibility for an IVA
- You will have over £10,000 of unsecured debt
- Your assets (equity in a house, car) will not be enough for you to clear all debt through selling the asset
- You will have some available income (certainly over £100/mth) available to pay into the IVA
- You will live in England, Wales or N Ireland (residents in Scotland will need to consider a Trust Deed instead)
Results of a successful IVA
- Avoided bankruptcy and its penalties
- Made debt repayments that are affordable
- Had interest and charges frozen
- Had no hassle from creditors requesting payments
- Had a proportion of your debts written off
Please note that all these benefits naturally depend on you keeping to and completing the affordable repayment terms of your IVA. If you stop making payments into your IVA then your creditors may then petition for your bankruptcy and re-apply interest and charges.
Advantages of an IVA
- Affordable montly repayments can be made over five or six years.
- The fees will be included in monthly repayments and are set by creditors, once the IVA is setup and in progress.
- Lump sum amount if any can be used to make one-off full and final settlement or a combination of lump sum payment followed by fixed monthly replayments.
- Home owners can keep their home as long as they are able to maintain mortgage payments and any secured loans on the property.
Disadvantages of an IVA
- For the length of the IVA, you will be expected to live on a budget that is approved by the creditors through an Insolvency Practitioner. Whilst all reasonable household and personal expenses are allowed, there is little room for luxuries.
- Increased income (e.g. overtime, bonuses, pay rises) will be borne in mind and repayment levels recalculated. Any lump sum received will also be expected to be made available to the IVA.
- The IVA will be visible on your credit file, so obtaining further credit during an IVA is not normally an option.
It would be advisable if you feel that an IVA may be an appropriate solution for you, to discuss the possibility with a licensed Insolvency Practitioner or with a debt advisor.
Read more about IVA: