IVA Overview
A brief explanation of what an Individual Voluntary Arrangement is and how they work can be found below.
What is an IVA?
An IVA or Individual Voluntary Arrangement is a legally binding agreement between you and your creditors. Under the terms of the IVA your debts are consolidated down into one single monthly payment to be paid for a fixed period of time. At the end of the IVA all the remaining debt is written off by the creditors, leaving you free of debt.
Qualifying for an IVA
While individual cases will differ, generally to qualify for an IVA you must -
- owe at least £15000 in unsecured debt
- be unable to repay the debt through the release of any material assets
- have a regular income through employment, or in some cases a partners income will be accepted
- owe money to at least three different creditors
- have the agreement of at least 75 per cent of your creditors
How long will the IVA last?
Generally the IVA repayments will be made for a period of up to sixty months (five years), although legally the maximum length of an IVA is seven years. There is however a large amount of flexibility and so the length of an IVA can vary significantly from case to case.
Benefits of IVA's
If you are having debt problems then the advantages of an IVA include that -
- your monthly debt repayments can be reduced by up to two thirds
- all further interest and charges relating to your debts will be stopped
- unlike bankruptcy, an IVA is a private agreement only between you and your creditors and so no formal newspaper notification will be made
- any legal action including bankruptcy proceedings will stopped once the IVA is approved
Disadvantages of IVA's
Individual Voluntary Arrangements do have some disadvantages which should be considered before entering into any agreement. These disadvantages include -
- monthly IVA repayments can be increased but are less likely to be reduced
- if you cant keep up the repayments then the IVA may be 'failed' often resulting in bankruptcy
- at least 75 per cent of your creditors must agree to the IVA for it to go ahead
- in circumstances where you have no assets or significant income then filing for bankruptcy is likely to be a better solution to your debt problems
Beginning an IVA
If you are having problems with debt then the first thing you should do is to speak to an independent debt advisor such as ourselves. There are many organisations that are able to dicuss your debt problems with you and suggest the best way to overcome them. In most case this advice will be offered free of charge. Should an IVA be the best option for you then your case will be refered to an Insolvency Practitioner. Legally only a Licensed Insolvency Practitioner is authorised to prepare and manage an IVA.
For a more in-depth look at IVA's please continue to browse the rest of our site. If you have any questions relating to Individual Voluntary Arrangements or personal debt problems in general then please call us on 0800 043 50 43 or alternatively email enq@financialguardian.co.uk. A full list of ways in which we can be contacted can be found on our contact us page.