Individual Voluntary Arrangement - IVA

Is An IVA Right For You? Learn More Now...

Whilst an IVA has similarities with a Debt Management Plan (DMP) in that it is designed to help you pay off your debts, unlike a DMP, it is a formal legally binding arrangement with your creditors. This has direct benefits;

• Interest and charges are frozen
• Whatever you can’t afford to pay back will be written off
• Legal protection from creditors
• Usually lasts 60 months
• Supervised by an Insolvency Practitioner
  

An IVA is suitable for those debtors who have a reasonably high level of unsecured debt, usually over £15,000 and at least 3 or more lines of credit from 2 or more creditors.

What is an Individual Voluntary Arrangement (IVA)?

An IVA is a legal process through which you can gain protection from your unsecured creditors by entering into a legally binding repayment agreement with them, which is then supervised by a licensed Insolvency Practitioner (IP).

Your creditors vote to accept or reject the proposal for an IVA, they may wish to add their own modifications but can only do so with your consent. Once your creditors have agreed an IVA, all interest and charges on your unsecured debts will be frozen and the IP will monitor the IVA's progress and ensure that the terms and conditions that were agreed to are followed.

The Insolvency Practitioner will be closely involved in calculating your monthly repayment, and you will be asked to make known all of your assets, liabilities, income and your cost of living. This information will ensure that you will not get into even more debt, as the amount payable to creditors is the amount you can afford to pay after your normal cost of living has been deducted.

Through this process of solving all your debt problems, you are normally required to make regular monthly repayments, usually over a 60 month period, after which any remaining debt is written off.

If you are a homeowner, you will normally be required to release any equity you have in your property by taking out a mortgage or secured loan and paying this money to your creditors. If you have an endowment policy linked to your mortgage, then you may have to cash it in to use the proceeds to pay your creditors.

It is your responsibility as the debtor to make the agreed payments to the IP who will then ensure that these are distributed to all creditors on a pro-rata basis. Failure to maintain your payments will almost certainly result in the failure of the IVA which could lead to bankruptcy.

To learn more about IVAs, call Debt1 now!