Individual Voluntary Arrangement (IVA)

An IVA is a legally binding agreement between you and your creditors. It enables you to repay your debts at an affordable rate over a fixed period, usually five to six years. With an IVA, you make a single monthly payment to an insolvency practitioner who distributes the funds to your creditors.

One of the benefits of an IVA is that it stops any further interest and charges on your debts, which can help to reduce the overall amount that you owe. Additionally, once the IVA is in place, your creditors cannot take any legal action against you or pursue any further recovery of your debts.

To be eligible for an IVA, you must have at least £6,000 of unsecured debt and have at least two creditors. You also need to be able to afford to make regular payments towards your debts.

Advantages Of An IVA

  • The IVA will reduce the monthly payments you make to one affordable payment based on your circumstances and guidelines acceptable to creditors.
  • If the IVA is approved by 75% of your voting creditors (by value) anyone who votes against is still bound by it.
  • There is likely to be a proportion of your debt written off by your creditors.
  • Once the IVA is approved no further interest can be charged and on successful completion of the IVA, the balance of what you owe creditors is written off.
  • It offers legal protection from your unsecured creditors so they can’t take any further action against you.
  • It is for a fixed period of time (usually 5 years; it may be extended to deal with any change in circumstances or if you have equity in your property).
  • You may be able to continue to run any business you have.
  • It offers you the ability to protect any assets you may have such as your house or car.

Considerations Of An IVA

  • Creditors may propose changes to the terms & conditions of your proposal, which may have to be accepted for your IVA to be approved.
  • The IVA may adversely affect your credit record for up to 12 months after your IVA has been successfully completed and you won’t be able to obtain any further credit while you’re IVA is active.
  • If you have a change of circumstances or are unable to comply with the existing IVA proposal, creditors may agree revised terms. If the creditors do not agree, the IVA is likely to fail and you will remain liable for your debts and may be made bankrupt (although in most circumstances even when cases fail, we do not petition for bankruptcy).
  • Your IVA is entered onto a public register.
  • You will remain liable to pay certain debts such as student loans, fines and some debts arising from family proceedings