Individual Voluntary Arrangement

What is an IVA?

Individual Voluntary Arrangements (IVA’s) were introduced by the Government in the 1986 Insolvency Act. They were put in place to help anyone in serious debt finding it difficult to make their monthly payments.

An IVA is a formal agreement with your creditors (the people you owe money to) where you agree to pay only what you can afford. This is paid as a single monthly payment, usually over a period of 60 months. At the end of the period any remaining debt is written off and you owe nothing to your creditors.

You could write off up to 70% of your debts.

Provided you maintain your repayments as agreed, an IVA protects you from further legal action from your creditors.All interest and charges are frozen at the time the IVA is agreed.

IVA Advantages

  • You only have to make one monthly payment or in some cases a one-off payment
  • Your monthly payment will be affordable and within your monthly budget.
  • An IVA can be set up in as little as 4 weeks
  • The stigma of bankruptcy is avoided
  • An IVA is just between you and your creditors, so it’s confidential
  • Protection from creditors, once the IVA is agreed your creditors cannot bring any action against you if you comply with the IVA
  • Unsecured debts cleared usually in 60 months
  • An IVA could safeguard your property
  • An IVA can be complete in as little as 1 year if you can offer a lump sum payment
  • All interest and charges are legally frozen.
  • An IVA is suitable for homeowners, individuals or couples and even business owners

IVA Disadvantages

  • Any debts not bound by your IVA will remain outstanding.
  • Your credit file will be affected for a period of 6 years, starting when the IVA is approved
  • your ability to obtain credit will be limited
  • An IVA can impact on certain jobs such as those in finance and the Civil Service
  • If you are a homeowner with equity in your property you may be required to introduce part of your share of this equity in the final year of the arrangement. A remortgage may be restricted and on less favourable terms. If you can’t get a remortgage your arrangement can be extended for up to another year
  • If your IVA fails, your creditors may request that you be made bankrupt. This will always be discussed before your arrangement commences.
  • There are restrictions on certain items of expenditure for a person in an IVA.

Debts you can’t include in an IVA

  • Child Maintenance
  • Child support deficit
  • Student loans
  • Magistrates’ court fines
  • Secured loans
  • Current car/bike finance
  • Mortgage arrears
  • Guarantor Loans

Debts, which can be considered in an IVA

  • Personal loans
  • Store cards
  • Payday Loans
  • Catalogues
  • Debt collectors
  • Bailiffs
  • Old car finance
  • Previous years council tax (subject to area)
  • Old utility bills
  • Old phone bills
  • HMRC Debt

Criteria to qualify for an IVA

  • Owe more than £5000
  • Can afford a minimum of £80 per month
  • Owe money to two or more creditors
  • Are financially struggling to meet repayments or in arrears

It is very important that you understand your legal rights and responsibilities if you are in debt. Expert debt advice can make an enormous difference to the outcome of any debt problems you are currently facing.