An IVA is one of many ways in which you can become debt free. IVA stands for individual voluntary arrangement. It’s a legal agreement in which you make with your creditors to pay back debts which you are struggling with, stopping your creditors taking further action against you. You will make payments over a set period of time, usually lasting five years. After your IVA is completed, you are given ‘debt forgiveness’ and you will become debt free.
There are no maximum or minimum amounts you must owe to qualify for an IVA. However, you must usually be in at least £4,200 of debt to get your creditors to agree. You can owe this across more than one debt, with more than one creditor.
When your IVA is complete you will be issues with a certificate of completion. It will also be sent to your creditors so they know that the IVA has been completed and the debt to them has been satisfied. Your credit report will also show that you have completed your IVA successfully.
“So what is the process? How do I get an IVA?”
The first step to getting an IVA is to seek an organisation like ourselves who will not charge you any fees for the service – many companies do.
One the initial call, we will assess your situation and establish whether an IVA is the right solution for you. We will also complete an income and expenditure (budget) which allows us to ascertain your affordability. Without ascertaining your circumstance and affordability we cannot give you the appropriate advice.
Once we have confirmed that the IVA is the right solution for you, we will need to see your proof of income. This can be your pay slips, recent bank statements or benefits letters. We will also need to receive information from you about your savings and assets – including how much your assets are worth and bank statements for any savings. A list of all your debts is needed, who they’re owed to and any paperwork to do with your mortgage or rent agreement.
From the information we have received, we will then work out a realistic repayment plan. The payments will be fixed at as much as you can afford each month, based on your income and expenditure – we will not let you go short.
Once a payment plan has been agreed, your insolvency practitioner will write a formal proposal of your IVA to your creditors. This includes a full report into your financial circumstance, details of the repayment plan and reasons why creditors will get more from the proposed IVA than they would if you were to be made bankrupt.
A meeting is then called by your insolvency practitioner. This is where your creditors will either accept or reject your proposed IVA. You do not need to attend any meeting; we will deal with this on your behalf.
“So can my IVA change?”
Your creditors can suggest changes to the IVA. However, no changes will go ahead without your consent. The IVA must be accepted by creditors who represent 75% of what you owe to be accepted. Once it has been accepted, it is legally binding on all your creditors whether they voted against it or not.
The IVA will then become active straight away and you must begin your monthly payments to your insolvency practitioner. Your insolvency practitioner will supervise your IVA and ensure that the right creditors get the correct payments.
Your insolvency practitioner will review your financial circumstances annually. You will be required to show them similar paperwork as during the application process. This is to ensure that your payments are neither too high nor too low.
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