Individual Voluntary Arrangement (IVA)
An IVA is an agreement between the debtor and their creditors to repay all or a fraction of their debts. This is conducted through a ‘middle-man’ - an insolvency practitioner - who take payments and divides them between creditors as necessary.
What is an IVA?
An IVA is a formal alternative for those wishing to avoid bankruptcy and is suitable for anyone with unmanageable debt. An IVA allows you to pay your debts in one affordable monthly payment, usually over five or six years. At the end of your IVA any unsecured debt left is written off.
Is an IVA right for me?
An IVA may be a suitable solution if you can afford to pay something towards your debts but not the full amount your creditors want. An IVA may impact your personal, financial and professional life so you should carefully consider this option before deciding to apply. An IVA is only available for residents of England, Wales or Northern Ireland. In Scotland, a trust deed is a similar solution.
Is an IVA legally binding?
If the majority of your creditors agree to it (at least 75%) then an IVA becomes a legally binding arrangement. This means your IVA is approved by the court and your creditors must stick to it.
How much of my debt will an IVA write off?
With an IVA, a considerable amount of your unsecured debt could be written-off. However, this figure will vary depending on your circumstances. This is because the monthly amount you pay into the arrangement is based on your disposable income.
Ready to speak to an advisor?
It’s important to remember that no debt solution is perfect and there is no ‘one-size-fits-all,’ which is why we recommend speaking to one of our expert debt advisors about your options and next steps.
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IVA Pros
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Your monthly IVA repayments will depend on your personal income and expenditure, meaning it will be an amount you can afford each month.
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Your payments will be made over 5 or 6 years and once you’ve made your final payment, the remaining unsecured debt will be written off.
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The contractual interest and charges on your unsecured debt will be frozen and your creditors will no longer be able to contact you.
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If you're a homeowner, you should be able to keep your home as long as you keep up with your mortgage repayments.
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There are no set up fees to be paid before your IVA is agreed.
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If you have a lump sum to offer, you can use this as a 'full and final' settlement or a combination of a lump sum payment as well as monthly payments.
IVA Cons
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Creditors don’t have to agree to an IVA, therefore we can’t guarantee your IVA will be accepted.
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An IVA will remain on your credit file for 6 years from the date your creditors agree to it or until your IVA is complete if it lasts longer than 6 years.
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Your IVA will be listed on the Individual Insolvency Service register.
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In some cases, if you own your home, you may be expected to re-mortgage to free up some equity for your unsecured creditors.
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You will pay fees to the IVA company but they will be included as a part of the one affordable monthly payment.
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If your IVA fails, creditors may request the supervisor of your IVA petitions for your bankruptcy.
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Any debts not included in your IVA will not be written off at the end of your arrangement and you will still need to pay these.