Individual Voluntary Arrangement
IVA is the short name for an Individual Voluntary Arrangement, it is a formally
agreed contract with your creditors that you will pay a fixed amount each month
subject to them accepting reduced payments and a reduced amount over the term. It
is normal that £15,000 or more debt across at least three creditors is required
to qualify for an IVA, however, please take note of the ‘I’ in IVA, each IVA is
assessed based on the individual, there is no fixed formula for the working of an
IVA.
An IVA has benefits over and above the less formal Debt Management Plan (DMP) in
that there is a definite fixed term, usually 5 years sometimes 6 years from commencement.
After this point, your creditors will have already agreed to write off any outstanding
unsecured debt. You may, however, be required to release equity in your property
by way of a remortgage in the fourth year.
How an Individual Voluntary Arrangement (IVA) works
Step 1 – your first call to us on 01902 585 017
When you contact us, we will initially assess your circumstances using our Best
Advice Calculator and discuss the various options available to you. If your requirements
are for an IVA we will then forward your information to one or partners who will
then discuss this with you in more details. If this is not the solution for you,
we will consider you for one of the other options we have available.
Step 2 – IVA proposal
If you appear to meet the criteria for an IVA, your case will be passed on to one
of our IVA partners. They will contact you in order to get further information and
make a decision as to whether you can proceed with an IVA application.
Step 3 – meeting of creditors (MOC)
Once your proposal has been drafted and sent to your creditors, we will arrange
a by proxy meeting. This is in order that your creditors can vote on whether to
accept your IVA proposal.
You would not normally attend this meeting as all votes are usually cast “by proxy”
which is similar to a postal vote. You may attend if you wish.
Step 4 – your IVA has been approved
In around 75% of cases, your IVA will be approved, at which time your case will
be passed to our supervision department, you will be appointed a case handler who
will be there as a point of contact throughout your IVA. If one of your credits holds 75% of your debt (by value) they must agree for your IVA to be approved.
Benefits of an Individual Voluntary Arrangement (IVA)
An IVA will:
- Consolidate all your debts
- Reduce your monthly outgoings in line with what you can afford
- Give you a date on which your debt will be cleared
- Freeze your interest and charges
- Stop debt collectors and bailiffs form calling you
- Stop letters and phone calls from your creditors
Potential drawbacks of an Individual Voluntary Arrangement (IVA)
An IVA, like all other financial solutions has potential drawbacks. None are definite,
but we feel it appropriate to outline them so that you can make an informed decision.
- Your details will be recorded on the insolvency register
- You will not be able to get any additional credit
- Restrictions may be imposed on your expenditure
- Your credit file may be affected
- You will be tied into the agreement for 5, possibly 6 years
- Homeowners may be required to release equity from their home in the fourth year
through a loan or remortgage
- Failure to comply with the IVA may lead to bankruptcy
- Creditors holding 75% of the debt must agree to the IVA
Important Information About Our Service & Fees
Whilst we strive in all cases to negotiate the best deal with your creditors, we
cannot guarantee a reduction in interest or charges. Whilst we are able to provide
initial advice over the phone without charge, if a debt solution is taken out, please
be aware that fees will be charged. We aim to keep these fees as low as possible
and believe that we are very competitively priced, for detailed information on our
fees, including examples for each product, please click this link
Further Additional Information
Will your credit be affected?
Potentially Yes - Click here
The Insolvency Service has produced a guide: In Debt? Dealing With Your Creditors.