Individual Voluntary Arrangement
NOT AVAILABLE IN SCOTLAND
What is an IVA?
An Individual Voluntary Arrangement (or ‘IVA’) is a legally binding agreement between a debtor and their creditors, suitable if you have a minimum of £5,000 of qualifying unsecured debt, owed to two or more creditors, and are struggling to keep up with your debt payments. It enables you to prepare an offer (referred to as a ‘Proposal’) of what you can realistically afford to repay over an agreed period of time, normally five or six years. This offer needs to be approved by 75% of your creditors (by value) in order to be put in place.
Check If You Qualify For An IVA
When you contact Debt Plans Direct for help with your finances, we go through your income and expenditure with you in order to assess your affordability to see if you are eligible for an Individual Voluntary Arrangement (IVA) If you qualify, we will request the necessary documents from you and refer you to a registered Insolvency Practitioner (IP) whom are specialists licensed to administer and manage Individual Voluntary Arrangements (IVA).
Preparing Your IVA Proposal
Once you have been referred to a licensed Insolvency Practitioner (IP) your IVA proposal is drafted and prepared, this details the proposed reduced payments to your creditors, you will be given the opportunity to check your drafted IVA proposal, agree to its content before it is submitted to your creditors.
Meeting of Creditors
This is the point where creditors look at your Proposal and decide whether they wish to agree to its terms, or not. Your creditors do not have to agree, however if the majority of your creditors (75% by value) do agree to the terms of your proposed IVA, the minority who declined your IVA will still be bound by its terms.
Your IVA Outcome
If your IVA is approved, your discussed IVA payments will begin. Your included creditors will no longer be able to chase you for debt payments and interest and charges on included debts will be frozen at this point. Should your IVA be unsuccessful, you will be contacted to discuss alternative debt solutions to help you manage your financial situation. Call Us today and we will provide you with confidential, friendly and non-judgemental debt advice that is tailored to you and your own individual circumstances.
Advantages of an IVA
No upfront payment is required to access the solution. A Nominee and Supervisory fee are both payable once the solution is active. These are taken from the monthly contributions you pay into. More Info Here.
Your property is protected on an IVA – as long as you keep up with the mortgage/any secured loan payments
Your creditors will not be able to start or continue with, any legal action against you relating to your debt once your IVA is approved. Apart from sending you regular statements, your creditors will not be able to contact you regarding your debts
When entering an IVA, a full assessment of your income and outgoings will be completed with you to work out how much you can realistically afford to pay towards your debts each month, regardless of the amount you are currently paying. Once your IVA is approved, you will pay this one single, affordable monthly payment to your IVA Company each month
An IVA can be varied to meet your needs (subject to creditor agreement) should circumstances change
In most cases, the term of an IVA is set at five years, however in some cases it can be extended to six years
Disadvantages of an IVA
An IVA will negatively affect your credit rating for six years from the start date of your IVA and you will have limited access to credit until your IVA has completed, which could mean that you pay higher rates of interest until your credit rating is restored
Not all debts can be included in an IVA, for example student loans, child support and maintenance, magistrate court fines and social fund loans
An IVA is a matter of public record – the public can access details of your IVA on the Insolvency Service website:https://www.insolvencydirect.bis.gov.uk/eiir/.
An IVA may impact your employment; we always recommend checking your employment contract. Until you have successfully completed your IVA, you may not be permitted to hold certain public offices or continue as the director of a limited company
Homeowners will be expected to try and re-mortgage towards the end of their IVA and if affordable, release additional funds to be paid into the IVA. This re-mortgage may attract higher interest rates than your previous mortgage rate. If a re-mortgage isn’t possible, the term of your IVA may be extended by one year, during which you may be required to make additional payments
If you fail to maintain your IVA repayments or obligations, your IVA could fail and your creditors may decide to order bankruptcy proceedings
There are restrictions on the expenditure of those who enter into an IVA