IVA | Individual Voluntary Arrangement
If you are struggling with debts an IVA (Individual Voluntary Arrangement) could help you. It is a debt solution which allows you to lower your monthly payments to what you can afford, instead of your agreed contractual payments.
The IVA was introduced to allow over indebted individuals to agree a payment structure with lenders offering protection from bankruptcy, fines and court judgements. It is considered as a better alternative to Bankruptcy, for both you and your lenders. Every month thousands of people sign up for an IVA with their lenders.
In an IVA you make one monthly payment that you can afford (based on your income and living costs). You make this monthly payment for a fixed period of time (usually 5 years). After your payment plan is complete your creditors will legally write off any remaining unpaid debts. Every IVA is different so any actual debt write off will be entirely based on your debt and affordability.
The IVA has many advantages but it also has a number of disadvantages that should be considered. For example, if you are a homeowner and you have equity you may be required to offer some of this equity to your creditors or you may have to offer up to 12 additional payments towards the IVA. Your credit rating may also be impacted for up to 6 years from the start of your IVA. Read more advantages and disadvantages below.
If you are struggling with your debts an IVA could be a suitable option for you. Speak to one of our advisors to find out more.
Is an IVA with Debt Solutions the right choice for you?
An IVA could be the right choice for you if you:
- have debts over £10,000,
- can afford to pay at least £100 to your creditors each month,
- are struggling to repay your monthly creditor payments.
An Example of how an IVA works
In the above example the contractual payments before entering the IVA were £420 per month which was unaffordable to the applicant. After the IVA was in place, the applicant made payments of £220 per month for 60 months. Total repaid was £13,200, with the remaining unpaid £8,800 being legally written off at the end of the 60 month term.
Benefits of an IVA
- 1 easily affordable monthly payment based on your income and expenses
- Unlike some of our competitors, we do not charge any Upfront Fees, saving you £100s
- An IVA offers you protection from creditors
- Creditor pressure stopped as you can direct any creditor contact to your case manager
- Can be complete in as little as 1 year if you can offer a lump sum payment
- All interest frozen immediately
- Suitable for tenants or homeowners, individuals or couples, and even business owners
- We can setup an IVA in as little as 4 weeks
Disadvantages of an IVA
- If you are a homeowner with equity in your property you may be required to introduce part of your share of this equity in the final year of the arrangement. A remortgage may be restricted and on less favourable terms. If you can’t get a remortgage your arrangement can be extended for up to another year.
- If your circumstances change, and your insolvency practitioner can’t get creditors to accept amended terms, the IVA is likely to fail. You will still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your IVA.
- If your IVA fails, your creditors may request that you be made bankrupt. This will always be discussed before your arrangement commences.
- Your credit rating may be impacted for up to six years from the commencement of your IVA. Details of your IVA will be recorded on a public register.
NOTE: In an IVA you will have an agreed budget for your living costs. There are allowances for this in the agreement. These expenses will be mostly based in what you currently have to pay out each month. You should declare all normal monthly expenses to your creditors so they understand your situation more clearly. There may be some restriction on some expenditure items, such as mobile phone for example.
To find out more about IVAs contact us Debt Solutions
- Call free on 0800 043 0200 and speak to one of our friendly advisers,
- Fill in the form at the top of this page and one of our advisors will call you back,
- Use our Debt Solutions Budget Calculator to see is an IVA is right for you,
- Fill out our IVA Application Form now.
If you cannot find out the information you need on IVAs in our website, you can chat online to one of our debt advisors who know everything you need about the IVA. We will be happy to help you find the perfect debt solution for your circumstances.