IVA’s - Part of our Debt Help & Advice service
An IVA (or Individual Voluntary Arrangement) is for many people a viable alternative to bankruptcy. It is a legally binding agreement to pay an agreed amount of your debts off over a fixed term, and write the rest off.
This usually means an affordable monthly instalment over a five-year period.
Is an IVA right for me?
- Get advice - an IVA is not the only way to manage debt, and may not be right for you.
- To get an IVA you generally need 'unsecured' debts of at least £20,000 (a mortgage is a 'secured' debt so you can't get an IVA to pay off your mortgage, but we can help you with re-mortgaging).
- You may be able to get an IVA if your debts are less than £20,000 if you owe the money to the Inland Revenue or Customs and Excise
How much of my debts will be written off?
In our experience, it is unusual for more than 55-65% of debts to be written off under an IVA. It is sometimes possible to write off up to 95%, but this is rare.
Are there different types of IVA?
Some IVA’s are set up on the basis of using a lump sum to make offers to the creditors rather than making monthly payments. This will usually mean raising a lump sum on your assets. Some IVA’s are a mixture of both a lump and monthly payment offer. We will assess your case and recommend the best option for you.
How do I arrange An IVA?
Call us for free advice and assessment of your debts. If an IVA is the best debt solution we will prepare your case and appoint one of our Insolvency Practitioners to act on your behalf.
How long will it take to arrange an IVA?
Usually an IVA can be set up in six to eight weeks. The Insolvency Practitioner drafts a proposal to your creditors and invites them to a Creditors Meeting. At this meeting the Insolvency Practitioner will negotiate on your behalf with your creditors, who will vote on whether to accept or reject the IVA proposal.
Often creditors send their vote and don't actually come to the meeting, but it is vital that all your creditors are contacted. If they have no notice of the meeting they do not have to be bound by the terms of the IVA and can pursue you for their debt separately.
What happens at the Creditors Meeting?
If 75% of your creditors 'by value' who actually vote agree to the IVA, then the rest are bound by the IVA, even if they voted against it or did not vote at all. 'By value' means the creditors to whom you owe 75% worth of debt, not the number of creditors you have. So, if the creditors who you owe the highest amount to vote against the proposal then the IVA will not go through.
Sometimes creditors will haggle about the terms of the IVA. They may ask you to make payments over a longer period. They may ask for your assets to be used to raise the cash to pay for the IVA - this usually means re-mortgaging your home (we can also help you with this)
Do some creditors not accept IVA’s?
Some loan companies and debt collection agencies will not accept IVA’s. Call us for advice, as there are other solutions to your debt problem.
If my proposal is accepted, what happens next?
Once the IVA is agreed the Insolvency Practitioner will supervise the arrangement and make sure you make the payments. However we will also take an interest in the case and you can call us for help or advice at any time.
An IVA can help you avoid bankruptcy, but you need to keep making the payments that have been agreed or you can be made bankrupt. It is therefore very important that we know the true extent of your debts - we need you to be completely honest with us about your financial circumstances, that way we can do our best for you and get the right settlement for you.
My creditors are taking me to court!
Once the Insolvency Practitioner has prepared your proposal, an application can be made to the county court for an Interim Order. This stops your creditors from starting bankruptcy proceedings against you. It also stops any other enforcement action without the court's permission whilst the Interim Order is in force. This can be done in a week.
Are there any disadvantages to an IVA?
If you do not keep up payments for the entire arrangement you will most likely be made bankrupt.
Your credit rating will be affected for 6 years.
If you are a homeowner you may have to re-mortgage your property.
