Individual Voluntary Arrangements (IVA) are formal and legally binding arrangements with creditors to make it easier for you to pay back debt.
An IVA involves drawing up a repayment plan – such as monthly – that you can reasonably afford and the creditors agree to. They will usually last for 5 or 6 years and are an alternative to bankruptcy.
If the payments you make aren’t enough to pay your debts in full by the end of your IVA, you won’t have to pay the rest.
An IVA offers you a potential alternative to bankruptcy if you are in serious debt, but you also have a regular income with which to make the required monthly repayments. The arrangement can include unsecured debt, such as payday loans, credit card arrears, overdrafts, personal loans, and catalogue debts.
Agreeing on an IVA with your creditors can be a positive and manageable way to pay back debt. We can work with you to help negotiate an IVA:
- We appoint an experienced Insolvency Practitioner to guide the process.
- We work carefully to listen to your specific situation and negotiate the best possible outcome.
- We communicate transparently and regularly throughout the process with our easily accessible team on hand to answer your questions.
Why choose an IVA?
The process of an IVA provides a formal structure that is based on affordability rather than any previous contractual arrangements and enables you to make more realistic repayments to creditors.
An IVA usually lasts five years – though this can be extended – with people paying what they can afford on a monthly basis before any remaining debt is then paid off.
Once an agreement is reached, your creditors cannot force you into bankruptcy and promise to legally ‘write off’ any money still outstanding at the end of your arrangement – providing you successfully reach the end of the IVA process.
We can help you achieve an IVA that suits you and your ability to make repayments, easing the worry of unmanageable debt.
What are the benefits of an IVA?
Providing your IVA is accepted by your creditors, you could enjoy the following benefits:
- Lower and consistent monthly repayments.
- Full legal protection from any creditors, who will not be able to contact you, pursue you for payments or take legal action.
- Any remaining debts are written off once you have paid the agreed contributions and completed the IVA.
- Interest and charges are frozen.
- Safeguard your property and ensure future affordability.
- Self-employed people or trading businesses can continue to trade throughout the process.
Can an IVA help me if I’m self-employed?
IVA’s were actually introduced to help self-employed people avoid bankruptcy and carry on trading, making them the ideal solution for those in that area.
Unlike bankruptcy, an IVA is geared towards allowing you to continue working while you clear your debts.
With an IVA there is no minimum dividend, no maximum dividend and no maximum duration – it’s very much down to your individual circumstances.
We’ll offer you the best advice and we’ll guide you on formulating a proposal that maximises the return to your creditors, while making sure that the terms are both reasonable and achievable.
What happens during the IVA process?
A licensed Insolvency Practitioner (IP) will help you work out an affordable percentage of your debt to pay off, by looking at your income, expenses and any other debts. They are also responsible for setting up and negotiating payments with your creditors.
Governed by The Insolvency Act 1986, an IVA is a legally binding process so when your creditors agree to the payments, all parties must adhere to the terms of the arrangement.
Contact the Future Strategy team today and we can carry out an assessment of your income, outgoings, and debts to let you know if an IVA is the right option for you.
After that assessment, and if you wish to proceed, our IP will start working on your proposal, which will outline your suggested repayment plan to creditors.
Rest assured, we will only put forward a proposal if we think an IVA is the best solution for you, and one we believe the majority of your creditors will accept.
Once you are happy, a copy of your IVA proposal will be sent to your creditors, who will then decide whether or not to accept it.
If and when your IVA is approved, you can then start to pay off your debts.
What requirements must I meet to qualify for an IVA?
If you wish to put together an IVA proposal, you must:
- Have a minimum of £5,000 worth of eligible debt (i.e. debt which can be included in an IVA).
- Owe money to at least two different creditors.
- Have an available monthly disposable income of at least £70 or more.
You can include a number of debts within an IVA, but exceptions include court fines, child maintenance arrears, student loans, and secured debts (other exclusions may also apply).
Other organisations may have slightly different qualifying thresholds to ours (such as higher or lower requirements on disposable income).
If you are in any doubt about whether or not you qualify for an IVA, please get in touch with us to find out more.
What else should I consider with an IVA?
Once you and your creditors have agreed on an IVA, it’s important to stick to these terms. Failing to do so could lead to your arrangement breaking down.
If your personal circumstances change after the IVA has started and the Insolvency Practitioner (IP) is unable to persuade your creditors to accept amended terms, the whole process is likely to fail.
This means you will still owe what you did at the start, minus the sum which has been paid during the IVA.
Your creditors could also resume taking action against you and interest may start accumulating on previous debts.
It’s possible that your creditors could reject your IVA proposal, but there is normally a specific reason for this. We can negotiate with creditors on your behalf, or even resubmit the proposal if required.
Will an IVA affect me if I own my home?
No. In fact, an IVA has long been a popular choice for homeowners as, unlike bankruptcy, you won’t be forced to sell your family home to complete the process.
An IVA contains agreed rules regarding your property which means that rather than being forced to sell your home, your IVA will instead be extended by 12 months.
IVA stands for an Individual Voluntary Arrangement, a formal method of dealing with unmanageable unsecured debt in England, Wales and Northern Ireland. It is one of several formal debt solutions aimed at helping people out of serious financial problems.
Is bankruptcy an easier option?
Declaring personal bankruptcy is a drastic step and one which affects every area of your life, long after you are discharged. Financial freedom and control are removed, which although making you ultimately debt-free, also leaves behind a long-lasting and poor financial reputation.
Although an IVA is also a formal debt process, it is less extreme than bankruptcy. Anyone entering an IVA will experience problems obtaining credit for some years, but an IVA carries with it less social stigma, and offers protection if you own property.
Applying for an IVA
When considering an IVA, you need to obtain impartial professional advice from licensed insolvency practitioners.
Future Strategy can provide this, and offer you trusted advice on your suitability for an IVA and how it might impact your future.
Contact our team today for a free and confidential initial consultation.
We can talk you through all of your options and find you the right solution
We're always here to help.
For free, immediate and confidential advice about unmanageable personal debts, please contact us.