Benefits of an IVA

An IVA (Individual Voluntary Arrangement) is designed to help people with debts of over £15,000.
 

With an IVA you could:

  • Repay your unsecured debts in (normally) 5 years
  • Prevent or stop legal action, including bankruptcy
  • Freeze the interest and charges on your debts
  • Avoid repossession and keep your home

 Should I enter into an IVA?

The short answer is “we don’t know yet”. The key word in an IVA is “Individual”. We will look at your specific circumstances and explain how all the options fit your needs. We work with you to select the best option, and we take the time to explain how everything works.
 
What exactly is an Individual Voluntary Arrangement?
An IVA is a legally binding agreement between you and your unsecured creditors.
 
It can allow you to write off the debt you have no chance of repaying 'within a reasonable time'. Unlike bankruptcy, it's extremely unlikely to force you to sell your property - and it won't be publicised in the newspapers or impose restrictions on your career.
 
Basically, you'd stop repaying your unsecured lenders directly. Instead, you'd make a series of (smaller) payments to the IVA, and your unsecured lenders would each get a portion of this.
 
How much will I pay into the IVA?
There is no fixed amount your contribution is based on what you can realistically afford to pay your creditors NOT how much your debt is. We will work with you to see how much disposable income is available for you to offer your creditors.
 
How much are the Fees for arranging an IVA?
The creditors sanction how much they allow for a fee in setting up and managing the IVA. The fees are taken from the contributions paid into the IVA. You do not make any additional payments to cover fees.
 
What will I get with my IVA?

Once your IVA is approved:

  • We will handle correspondence with your creditors.
  • You will have legal protection from creditor action – as long as you stick to the IVA terms
  • You will have monthly payments you know you can afford
  • Your home will be protected from repossession, although you may need to release equity.
  • You will get a dedicated professional who will regularly review your circumstances to ensure you’re in control of your finances
 
How will it affect my credit rating?
Your ability to obtain credit will be affected for 6 years
 
What if my situation changes once my IVA has started?
Creditors understand that a lot can happen while the IVA is in progress, and that something could change, making it difficult (or impossible) for you to keep up with your payments. You could lose your job, for example, or your rent/mortgage/utility bills could rise more rapidly than expected.
 
If this meant you couldn't keep up with your payments, your IVA could fail, and you could even end up being made bankrupt.
 
IVAs are designed to offer some flexibility where there has been an unforeseen change in circumstances. If you run into difficulties in the middle of the IVA, your creditors may accept a few changes to the terms, rather than abandoning the IVA altogether. They may, for example, agree to accept lower payments for a longer period. As with the original IVA proposal, any 'IVA Variation' would have to be accepted by creditors accounting for 75% of the debt.
 
Similarly, if you receive a lump sum of money, they may accept a 'full and final settlement', bringing the IVA to a successful conclusion earlier than expected.
 
I'm a homeowner, will my house be affected?
An IVA is extremely unlikely to lead to the sale of your home, although you may be required to release some of the equity in it halfway through the final year of the IVA.
 
This is one reason homeowners with debt problems are particularly interested in IVAs, rather than bankruptcy, which would require them to release any equity worth over £1,000 and could force the sale of their property.
 
What's the difference between an IVA and bankruptcy?
 
 
IVA
Bankruptcy
Duration
Normally 5 years.
Normally 1 year, although: payments can last for 3 years, a Bankruptcy Restriction Order can last up to 15 years - although this is only for exceptional cases.
Effect on home
Very unlikely to force sale of home - but may require you to release equity.
Must release your share of any equity over £1000. Unless a family member or friend can buy your 'share' of the property, you may have to sell your home.
Publicity
Will not be advertised. Will appear in the publicly available Insolvency Register.
Will be advertised in newspapers and available publicly on the Insolvency Register.
Effect on career
No statutory restrictions, although some employment contracts may restrict certain roles if you have an IVA e.g. Solicitor.
Bankrupt individuals are barred from certain positions, such as company director & local government councillor.
 

 

Client Testimonials
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