IVA

What is An IVA

IVA or Individual Voluntary Arrangement is a formal agreement made between the person in debt and their creditors.

An IVA agreement allows you to consolidate all your debt into one affordable monthly payment to clear your debt over a fixed period of time, An IVA will usually last five years, after which your debts are written off.

Whilst there are no legal maximum or minimum amounts you must owe to get an IVA, usually you must have debt of at least £5,000 to get your creditors to agree to the IVA. You can owe this amount across more than one debt, with more than one creditor.

An IVA stops your creditors taking further action against you to recover your debt, We negotiate with your creditors throughout the IVA, meaning that you will no longer have to deal with demands for money or threats from your creditors.

Benefits of An IVA

   Protects your home

  You can keep your car

  Once your IVA is approved your creditor cannot add any interest or charges 

   You will be debt free in 5 years. Single monthly payment you agree at the start of your IVA is what you pay for 60 months and at the end of your IVA any debt remaining is completely written off 

  Once your IVA is approved your creditor cannot demand payments from you either in person, via letter or telephone

  Once your IVA is approved it is legally binding. You will know exactly where you stand and how long it will take for you to become debt free

If you would like advice which would stop impending creditor action and bankruptcy then an IVA would put you on the road to financial recovery, Look no further then an IVA – Individual Voluntary Arrangement

IVA Information Guide

Do I Qualify For An IVA?

  Do you have £5,000 or more in debt?

  Do you have 2 or more creditors?

  Are you willing to pay £70 or more towards your unsecured debts?

Do you live in Scotland? You will need to apply for a Scottish Trust Deed (Scottish IVA) 

How Much Does An IVA Cost

An IVA is not free. Legally you cannot set up your own IVA, An insolvency practitioner will be required to set up your IVA.

There are no upfront charges or fees involved setting up an IVA with IVADebtUK. Any fees involved with your IVA are recuperated from your creditors by the insolvency practitioner over the term of the IVA.

 IVA Process, How Do I Get An IVA

The first step is to seek an organization like ourselves who will not charge you any fees for their service.

Once we have spoken to you, on the initial call we will assess your situation and establish whether an IVA is right for you, we will complete an income and expenditure (budget) which allows us to ascertain your affordability.

Without ascertaining your circumstances and affordability we cannot give you the appropriate advice.

Once we have confirmed an IVA is right for you we will need to see proof of income (like pay slips, recent bank statements, or benefits letters), information about your savings and assets (including how much they’re worth and bank statements for any savings), a list of all your debts and who they’re owed to, and any paperwork to do with your mortgage or rent agreement.

We will then work out a realistic repayment plan based on the budget you have shown us. The payments will be fixed at as much as you can afford each month, based on your budget.

Once a payment plan has been agreed, your insolvency practitioner will write a formal proposal of your IVA to your creditors. This will include a full report into your financial circumstances, details of the repayment plan, and reasons why your creditors will get more from the proposed IVA than if they made you bankrupt.

Your insolvency practitioner will then call a creditors meeting, during which your creditors will either accept or reject your proposed IVA. You do not need to attend any meeting, we will deal with the meeting on your behalf.

Creditors can suggest changes to the IVA, but the changes won’t go ahead without your consent. An IVA must be accepted by creditors who represent 75% of what you owe in order to be accepted. Once the IVA has been accepted, it is legally binding on all the creditors you have included in it, whether or not they voted for or against it.

The IVA becomes active straight away and you must begin your monthly payments to your insolvency practitioner. Your insolvency practitioner will supervise your IVA and make sure that the right creditors get the right payments.

If your financial situation changes at all, you must tell your insolvency practitioner, who may be able to change the terms of your IVA to suit your new situation. In the terms and conditions of your IVA there is a stipulation allowing you six months or more grace in the event of your financial situation changing (losing your job).

Your insolvency practitioner will also review your financial circumstances once a year: you will need to show them similar paperwork as during the IVA application process. This is to make sure that your monthly payments are neither too high nor too low.

Am I Eligible For An IVA

An IVA is normally only suitable for people with a predictable, fixed income. In order to get an IVA, you must usually have at least £70 left in disposable income after you have met your essential living costs each month. Your creditors may still agree if you don’t have enough disposable income as long as you have assets that you can sell to raise money towards paying your debts. We would be able to offer you more specific advice once we know your specific circumstances.

To work out if you have enough disposable income, you’ll need to make a budget. Add up any income from benefits, maintenance payments, and employment, any lump sums of cash (for example an inheritance or competition win), and any defined contribution pensions, and then subtract your everyday outgoings (like rent or mortgage payments, utility bills, food bills, and childcare costs). If you decide to go ahead with an IVA, your insolvency practitioner will need to see your budget.

IVA Certificate When Do I Receive This?

When the IVA has been completed you will be issued 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 Insolvency Practitioner will inform the Department of Trade and Industry and the Court Service that your IVA has been completed. Your credit report will show that you have completed your IVA successfully.

You will receive a statement showing all the transactions that have been made, your payments into the IVA and the dividends paid to your creditors.

What Happens To My House In An IVA

If you rent your home, nothing will happen as long as you keep paying your rent.

If you own your home, you will almost certainly be asked to get a valuation on your house in the last year of your IVA. If remortgaging the house would raise more than £5,000, you will be asked to remortgage it and any money raised will be put towards paying back your debts. You will not have to sell your home. If remortgaging would extend the mortgage beyond its existing term, or put you beyond the state retirement age when it ends, you will not be expected to remortgage the property.

If you can’t remortgage your house for any reason (refusal by the bank, or complications with a jointly owned property, for example), you will have to pay your usual monthly payments under the terms of the IVA for an additional year.

It is possible but unlikely that you will be able to keep your home out of the IVA and thus avoid remortgaging it. If your insolvency practitioner feels that you will be able to pay back enough of your debts without including your house in your IVA, they may propose that it be excluded from the IVA when negotiating with your creditors, but this rarely happens.

Advantages of An IVA

One of the major advantages of an IVA is the fact that it is legally binding, both to you and your creditors. Once your IVA has been agreed, your creditors can no longer hassle you or take further steps to recover your debts, so long as you make the agreed monthly payments.

Another advantage of an IVA is that after a fixed period of time you are declared debt free.

Disadvantages of An IVA

IVAs are an expensive way to deal with problem debts. Beyond the insolvency practitioner’s fees, which can be very high, in order to complete your IVA you must make regular monthly payments for around five years. If your circumstances are likely to change or you don’t have a predictable source of income an IVA is probably not right for you.

You may have to sell more expensive assets (like cars, valuable jewellery, or any property that isn’t your family home), and in some cases you may have to remortgage your home at the end of your IVA.

Some other disadvantages of an IVA are that you will find it more difficult to get credit if you’ve had an IVA, which can affect things like catalogue shopping and obtaining a mortgage, as well as the more obvious things like getting a personal loan or credit card.

Certain professions are also not allowed to practice if they have gone through an insolvency procedure, which includes IVAs. Common professions covered by these restrictions are accountancy and legal services, but you should check your contract of employment and with any professional bodies to find out if you may be affected.

IVA or Bankruptcy

There are many situations in which an IVA is preferable to going bankrupt. If you wish to protect a particular asset or piece of property, you own your own business, or you work in a profession where going bankrupt may lead to you losing your job, an IVA is a far better method than bankruptcy for dealing with problem debts.

If you have, or may need to get power of attorney on behalf of someone you care for, avoiding bankruptcy allows you to carry on being their attorney.

An IVA also avoids you having to close your bank account (which bankruptcy demands). You do not have to tell your bank about your IVA.