Who can get an IVA?

Who can get an IVA?

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

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 more 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:

 Live in England, Wales or Northern Ireland.

 Have at least £5,000 of unsecured debt.

 Maintain a minimum payment of £70 per-month.

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.

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

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:

▪️ No upfront fees.

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

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

▪️ You can be debt free, usually after 5 years.

▪️ All creditors must agree to the terms and conditions of the IVA, once approved. You are protected by the rules and regulations of the agreement.

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

▪️ Creditors will not be able to excessively pressure you while they are under the influence of the legally binding IVA.

▪️ 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. 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 while your debts are being repaid.

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

▪️ Not all debts can be included in an IVA. Some examples of these debts include student loans, child support and maintenance, magistrate court fines, and social fund loans. However, an allowance can be given to enable you to continue repaying these specific debts.

▪️ 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, helping debtors to pay off their debts over a set period of time. It acts as an alternative to bankruptcy.

An IVA is a legally binding agreement made between a debtor and their creditors. Due to the legality and regulations imposed on Insolvency Practitioners, there is a set process each IVA application must follow. You must:

▪️Complete A Review & Budget

▪️Prepare Your Proposal

▪️Create a 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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