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| IVA |
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| If you have debts that you cannot afford or are facing bankruptcy, an IVA can relieve you; using Government legislation, you can have up to 75% of your debt written off. |
| Keep in mind that IVAs are meant to be an alternative to bankruptcy, an IVA can certainly get you out of debt, but they also have downsides, such as not being able to get credit for a number of years. The Government is hoping to reduce the number of consumers choosing the bankruptcy option by making the process of an IVA easier. |
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| An IVA may possibly be the best debt solution should you be struggling to make monthly payments on your unsecured debts of over £15,000, especially if you want to avoid bankruptcy. |
| The main difference between an Individual Voluntary Arrangement and other informal debt management plans is that it is a legally binding contract between you and your creditors. This means that you would reach an agreement with your creditors and would make arrangements to pay what you can realistically afford, typically over a five year period. The rest of your debts would be written off at the end of this period provided you have made all of the agreed payments into your IVA and adhered to its terms. |
| Your creditors often welcome an IVA, even though they are writing off a large part of your debt, as they stand a chance of getting more money than if you were to be declared bankrupt. What’s more, they could also claim tax and VAT relief on the bad debt. |
| Your IVA agreement will ensure that you can make affordable monthly payments. These payments will be paid directly to your Insolvency Practitioner who will manage those funds to pay off a portion of your debt. Once the five year period is finished, as long as you have complied with the terms of your IVA, you will have no unsecured debt. |
| As this type of debt solution is a legally binding contract, you need to be clear that you are able to commit to the payments you have agreed to make. An IVA is not just legally binding to you; it also prevents your creditors taking any further action against you. Another important difference between IVAs and bankruptcy is that it is a private arrangement between you and your creditors. Importantly, your job will not be at risk should your employer find out you have an IVA. |
All you need to do is apply for an Individual Voluntary Arrangement through us. One of our professional debt advisors will contact you to discuss your circumstances and determine whether an IVA is your best option. They will discuss your current financial situation with you, and from the information you provide, we will prepare an IVA proposal that your creditors are likely to accept. |
| The IVA process normally takes between 4 to 6 weeks as it’s a complex agreement between you and your creditors, starting from preparing a detailed fact find, writing the proposal, organising signatures and distributing the relevant documentation. |
| Your IVA proposal will be submitted to the Court and your creditors and a meeting would be held within 2-4 weeks. Your presence will usually not be needed at this meeting, as your Insolvency Practitioner, who acts as Chairman, would represent you and would propose the arrangement formally. |
| Of course we cannot guarantee that your IVA Proposal will be accepted at the Creditor Meeting. The only guarantee is that the Insolvency Practitioner is not likely to propose an IVA that may not succeed. |
| For your IVA to be accepted, 75% of creditors who vote (in terms of debt value) must agree to the terms of your IVA proposal. The agreed IVA will be binding to all creditors, regardless of whether or not they voted for its acceptance. |
| As long as you make your agreed monthly payments, you will be completely discharged of any unsecured debts at the end of the IVA period. |
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