Which debts can be included in an IVA?

Debts included in an IVA

▪️Credit cards

▪️Unsecured loans

▪️Payday loans

▪️Catalogue debts

▪️Store card debts

▪️Personal loans

▪️Overdrafts

▪️Utility bills

▪️Tax credit

▪️Benefit overpayments

▪️Debts to family and friends

▪️Other outstanding bills

Debts not included in an IVA

▪️Mortgages

▪️Hire purchase agreements

▪️Debts incurred through fraud

▪️Court fines

▪️TV licence arrears

▪️Student loans

▪️Child support arrears

▪️Other secured loans

Can I include mortgage and secured debts in an IVA?

If there is an instance when your property has been repossessed, then any shortfall from your Mortgage and Secured Loan can be included in an IVA as an Unsecured Debt.

Other debts can technically be included in an IVA, but the lender would have to give their permission for this to happen.

Are you still a homeowner? An IVA can protect your home.  Learn more here.

Other secured debts like HP Agreements can be included in an IVA but at the point of entering an IVA the vehicle must have been given back to the lender then any shortfall will be included as debt into the IVA. 

Alternatively, if you are keeping your car, an IVA protects this asset and will allow you to continue paying a contribution towards your car for the duration of an IVA.

What is an IVA?

An IVA (Individual Voluntary Arrangement) is a formal agreement made between the person in debt and their creditors. Once you enter into an IVA your creditors can no longer take further action against you to recover any outstanding debts, All interest and charges associated with your debts are frozen.

All IVAs are set up and managed by an Insolvency Practitioner (IP), An IVA is a form of insolvency that can potentially right off up to 90% of your debts and is also an alternative to bankruptcy.

In an IVA a single payment is agreed with your financial situation taken into consideration, The payment is then divided between the unsecured creditors over a set period of time (usually five years), after which any remaining debts are written off.

Once you enter into an IVA (individual voluntary arrangement) your creditors are legally bound by the terms and conditions imposed by an IVA, These include stopping to take any further action or contacting you directly.

Whilst there are no legal maximum or minimum amounts you must owe to get an IVA, Usually, you must owe 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.

At the end of your IVA, Any debt remaining will be written off and you will become debt-free.

An IVA is open to residents of England, Wales and Northern Ireland. Scottish residents can find support in the form of a (PTD) Trust Deed or also known as a Protected Trust Deed.

Who can get an IVA?

An IVA (individual voluntary arrangement) is normally only suitable for people who are struggling to maintain payments to their current debts and have a regular income.

In order to get an IVA, you must have spare income after you have met your essential living costs each month.

Your creditors will be obliged to agree to an IVA if you meet the other criteria needed to get an IVA plan. Your insolvency practitioner will be able to offer you more specific advice once they know your circumstances.

In order to qualify for an IVA, you must reside in England, Wales or Northern Ireland. You will also need the minimum requirements:

▪️ Have £5,000 or More of unsecured debt

▪️ Owe money to two or more creditors

▪️Live in England, Wales or Northern Ireland

▪️ Maintain a payment of a minimum of £70 per month

How does our IVA calculator work?

▪️Based on the details you provide, the IVA calculator will determine whether you qualify for an IVA or not

▪️It will also calculate the amount of debt you can write off with an IVA

▪️Our IVA calculator will send your results to your dedicated adviser

▪️We do not charge any setup fees

IVA FAQs

Who can get an IVA?

An IVA (individual voluntary arrangement) is normally only suitable for people who are struggling to maintain payments to their current debts and have a regular income.

In order to get an IVA, you must have spare income after you have met your essential living costs each month.

Your creditors will be obliged to agree to an IVA if you meet the other criteria needed to get an IVA plan. Your insolvency practitioner will be able to offer you more specific advice once they know your circumstances.

In order to qualify for an IVA, you must reside in England, Wales or Northern Ireland. You will also need the minimum requirements:

Have £5,000 or More of unsecured debt

Owe money to two or more creditors

Live in England, Wales or Northern Ireland

Maintain a payment of a minimum of £70 per month

Which debts can be included in an IVA?

All unsecured debts can go into an IVA. Here are some examples of the debts you can include:

Credit cards – Here are a few examples: Vanquis, Barclays, Natwest, Lloyds, HSBC, Tesco, Capital One

Unsecured loans – Barclays, Lloyds, Tesco, Wonga, Adverse Credit Loans Apply now

Payday Loans – Wonga, Lending Stream, Amigo, Satsuma, QuickQuid

Catalogue and store card debts

Credit Cards

Personal Loans

Overdrafts

Gas, electricity, and water bill arrears

Tax credit/ benefit overpayments

Debts to family and friends

Other outstanding bills

What are the pros and cons of an IVA?

Pros of an IVA:

It’s affordable, You only pay back what you can afford and normally only an agreed percentage of your debts

You make only a single payment each month which is distributed to creditors on your behalf.

You will be debt-free in a set period of time, normally 5 years

Once your IVA is approved, All your creditors must agree to the IVA. Including the terms and conditions attached to an IVA

By law, all interest and charges are frozen as long as you maintain your payments

Your creditors will stop calling, Once enough of your creditors agree to an IVA at least 75% in value of the creditors will need to vote in favour

Legally binding this means all creditor action, contact and demands will stop once the IVA has been approved

You won’t be forced to sell your home, Your home is a protected asset in an IVA

Cons of an IVA:

IVAs can be refused, Your creditors can refuse your IVA proposal but in most cases, we can negotiate with your creditors to get your IVA approved

An IVA is a formal agreement, Therefore you need to make sure you comply with the terms and conditions attached to an IVA

Your monthly repayments may leave you with a tight budget whilst your debts are repaid

It will affect your credit score. IVAs remain on your credit file for 6 years from the day it starts, Some IVAs can last longer, therefore, this will show on your credit file for longer

Not all debts can be included in an IVA, or example student loans, child support and maintenance, magistrate court fines and social fund loans are excluded from an IVA, but an allowance can be given to enable you to continue repaying these.

If you fail to make the payments due under the terms of your IVA, then your arrangement could fail.

Your IVA will be listed on the Individual Insolvency Service register

If you fail to make the payments due under the terms of your IVA, then your arrangement could fail.

What is the process of an IVA?

An IVA (Individual Voluntary Arrangement) was introduced as part of The Insolvency Act 1986 to help debtors come to an arrangement to pay debts over a set period of time as an alternative to bankruptcy.

An IVA is a legally binding agreement made between a debtor and his/her creditors, due to the legality and regulations imposed on Insolvency Practitioners there is a set process each IVA application must follow:

▪️Complete A Review & Budget

▪️Prepare Your Proposal

▪️Meeting of Creditors (MOC)

What's the cost of an IVA?

An IVA (individual voluntary arrangement) is not free. Legally you cannot set up your own IVA. The insolvency practitioner who will set up your IVA will charge a fee.

This fee is normally taken as regular instalments from the payments you make towards your IVA (debts). The fee is to cover the cost of the advice offered by the insolvency practitioner, the time spent putting together the legal aspects of the IVA and negotiating with your creditors, also managing the IVA once it is set up.

What if I miss an IVA payment?

Missing your IVA payment can be very risky, At all times you must keep your insolvency practitioner up to date with your current financial situation. Late payments may be acceptable if you have a good enough reason to why this has happened

Once you have missed 3 payments or equivalent then your practitioner will send you a ‘Notice of Breach’, Normally you will be allowed between one and three months to correct the problem explaining the missed payments and paying as soon as possible. Once you do this, no more action will be taken against you

Talk to your practitioner as the terms of your arrangement may be changeable but they can also terminate your IVA or apply to the court to make you bankrupt

You should always speak to your IVA provider as they will be able to help you in such a situation

Is my house protected in an IVA?

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.

An IVA is a preferred option by many homeowners as your asset is protected whereas the alternative of bankruptcy you would in most cases be asked to sell you home.

If you rent your home, nothing will happen as long as you keep paying your rent but we would always advise for you to check your tenancy agreement before entering any agreement.

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