IVA - Individual Voluntary Arrangement
An IVA is a popular solution for unaffordable unsecured debts. They are designed to help people unable to repay their debts in full, but who want to repay as much as they can. It allows you to avoid bankruptcy and become debt free in 60 months by making payments you can afford.
You're Not Alone.
In England and Wales approx. 150,000 people are current doing an IVA. Over 16,000 of those are with us. Apply for your IVA now.
It's you saying to your creditors: "I can't afford to pay my debts in full and the interest is making things worse. If you stop all interest and I pay what I can for 60 months, will you let me off the rest?"
Do I Qualify For An IVA?
Qualification for an IVA depends on several factors. It boils down to how much you owe, what assets you have, what you can afford to pay into the IVA and the stability of your income to enable you to maintain payments.
In short, you need to owe at least £5,000 spread over 3 debts, and be able to pay at least £70/month into the IVA. You need to be technically insolvent, meaning you can't afford to pay your debts as they fall due; nor have you assets you could easily sell to raise money to clear these debts. See IVA acceptance criteria for more information.
Benefits of an IVA
- Reduces Your Debts
Typically, you'll repay just 30%-80%; this figure depends on personal circumstances and the monthly payments you can afford. Upon the successful conclusion of the IVA, any debts remaining are written off.
- Stops Interest and Charges
Over the normal 60 month duration of the IVA, no interest nor charges can be added to your debts. This alone can save you £1000s.
- Stops Creditor Letters and Phone Calls
Creditors cannot contact you about these debts once the IVA is in place and payments are maintained.
- Prevents Bankruptcy
An IVA means you've reached an agreement with your creditors whereby they cannot bankrupt you while you maintain the agreed payments. Bankruptcy could mean losing some of your assets, including your home and car.
Important for you to know
While there are many benefits to entering into an IVA, you must be aware of the following important considerations before deciding if this is the right solution for you.
- Not all Debts are Included
It is your responsibility to ensure that you continue pay creditors that are not/cannot be included in your IVA; see debts we can help with for details. Failure to pay any taxes, fines, child support payments and other debts outside of your IVA could result in a loss of access to essential goods or services or repossession of, or eviction from, your home.
- Ability to Obtain Credit
During the IVA, you will normally not be allowed to borrow more money. The purpose of an IVA is to make possible the repayment of unaffordable debts, so borrowing again should be furthermost from your mind when considering one. A record of your IVA will be retained by credit reference agencies for six years.
- IVA Contributions
While creditors are willing to forgive you some of your debts, you are expected to repay as much as you can reasonably afford. Therefore restrictions may be applied to your expenditure, but you won’t be expected to live in poverty. Also, if you come into extra money during the IVA, you will be expected to contribute this, in part at least, into the IVA.
- Formal Procedure
You can withdraw your IVA application up to the point it is approved by creditors, after which you are bound to formal insolvency proceedings. Your participation in an IVA is entered onto a public register.
- Subject to Creditor Acceptance
There's no guarantee your IVA application will be accepted by your creditors. However we only put forward cases where there is a high expectation of success and typically achieve a success rate of over 90%
- Risk of Bankruptcy
While an IVA can prevent bankruptcy - should it fail and you do not make alternative arrangements with your creditors, you may be made bankrupt.
- IVA Fees and Costs
The fees and costs associated with an IVA come out of the money paid into the IVA. You don't pay anything over or above the agreed IVA monthly contributions. See IVA Fees for full details.
IVAs and Home Ownership
If you're a homeowner with a mortgage, under an IVA the mortgage and any other secured payments are prioritised, meaning they are taken into account before looking at how much you can afford to pay towards your other debts. Therefore your home is protected, unlike in bankruptcy.
If you have significant equity in your property, you are likely to be asked to make a contribution from that towards the end of the IVA by way of re-mortgage. This is subject to affordability; so you’re never required to pay more than you can realistically afford. Being an IVA holder will impact your credit rating and ability to get a re-mortgage. If you are unable to re-mortgage, the IVA may be extended by a further 12 months. See more about IVAs and homeowners.
Applying For An IVA
The next step is to get in contact with us. We'll discuss your debts and see how much you can realistically afford to pay back each month. Should an IVA be the most suitable solution, we can make a formal IVA Proposal to your creditors.
If your IVA proposal is accepted by 75% of the creditors by value of debt, the IVA is approved, your debts are frozen and no more interest or changes can be added.