Individual Voluntary Arrangements – IVA

A debt solution offering affordable payments and potentially debt forgiveness

A single, affordable payment

Pay what you can afford each week/month.

Debts significantly reduced

Repay part of your debts to clear them in full.

Interest stopped

No more interest nor charges added.

Full legal protection

All collection activity and legal action stopped.

What is an IVA?

A IVA is a solution for unaffordable unsecured debts. It is intended for people with little prospect of fully repaying their debts – but able to make some level of regular repayments.

The idea is – you pay what you can reasonably afford over normally 60 months – and in return, any remaining debt is written off.

An IVA is formal debt solution – meaning it is based upon insolvency law and legally binding once in place.

If you owe more than £8,000, are struggling with payments but afford at least £100 per month – an IVA may be a suitable debt solution for you.

An IVA may not be suitable in all circumstances. Fees apply. Your credit rating may be affected.

How an IVA works

An assessment of your income, outgoings, assets and debts is made based upon standard expenditure guidelines. This will tell us if an IVA is a good option for you.

Should an IVA be suitable – the next step is to draw up a formal proposal for consideration by the companies and organisations you owe – who are your creditors.

If the proposal is approved by 75% of the creditors by value of debt the IVA is accepted and all creditors are bound by its terms, including any creditors who did not vote or voted against. All debts are frozen so no more interest or changes can be added.

Being In An IVA

Creditors must not chase you for payments for any of the included debts. So, no more letters, phones calls nor threats of legal action.

Provided you maintain payments – unpaid debt is written off at the end of the IVA, which typically lasts 60 months.

Your expenditure is expected to keep within reasonable guidelines – but you won’t be asked to live in poverty.

You situation is reviewed once per year to make sure the payment levels remain fair for both you and those you owe.

IVA Benefits

Once your IVA has been accepted, you could benefit from:

Lower repayments

Repayments to creditors are based on what you can afford – not how much you owe.

Debt forgiveness

Once you have made the agreed contributions any remaining money owed is written off.

A sense of control

An IVA allows you to regain control of your debts and work towards debt freedom

Debts cannot increase further

Frozen interest and charges so that your debts do not increase.

Legal protection

Creditors cannot pursue you for their debt nor take legal action.

Knowing when you’ll be debt free

A fixed agreement usually lasting 5 years, after which any remaining unsecured debts will be written off.

Home is protected

An IVA can help safeguard your property and ensure future affordability even after the IVA.

Stress reduced

You’ll be less stressed knowing IVA will stop contact from your creditors and your payment are affordable

Avoidance of bankruptcy

An IVA Enables you to continue to trade if you are self-employed or have a trading business.

Better able to afford other financial commitments

An IVA can catch unknown debts such as unpaid tax or overpaid tax credits.

IVA Considerations

As with any insolvency process there are consequences of entering into an IVA. These include:

IVA can fail

If you don’t stick to the agreed terms of your arrangement and you don’t speak to your IVA provider – your arrangement may fail.

Risk of Bankruptcy

If your arrangement fails your creditors could take action against you which may included bankruptcy if any single debt is greater than £5,000.

Restrictions on expenditure

Your expenditure is expected to remain within certain guidelines although exceptions can be considered if justifiable. But, won’t be expected to live in poverty.

Assets are a factor

If you have assets then you may be asked to make these available to your IVA e.g. savings plans.

Your property

If you are a homeowner and you fit certain conditions you may be asked to re-mortgage your property in the 5th year of your IVA to release some equity to creditors. There are many situations where a re-mortgage is not required which we can explain to you. If a re-mortgage is not available an IVA can be extended for 12 months which is generally what happens in most cases.

Credit Rating

An IVA will appear on your credit file for up to 6 years from the date it commences. During this time it may be difficult for you to obtain credit.

No guarantee of acceptance

Creditors can reject an IVA but there are usually specific reasons for this and we can negotiate with creditors or even re-propose the IVA if required. We do not put forward IVAs without a high expectation of approval.

Not private

An IVA will be recorded and entered onto a public register but someone would need to be specifically looking for you on it to find you.

Not all debts can be included

Most debts, so long as they are not secured on an asset (like a mortgage) can be included in an IVA. Exceptions include:

Child Maintenance arrears
Car finance while you still own the vehicle
Rent arrears
Certain Court fines
Student loans
Utility bills with any current provider

Debt Includable in an IVA

Most debts can be included in an IVA and be subject to negotiated repayment.

Loans & Overdrafts

Store & Credit cards

Benefits overpayments

HMRC & Council tax arrears

Debts with a Court Judgment

Rent, Gas and Electricity arrears

Catelogues & Buy now – pay later agreements

For other debts contact Financial Guardian for clarification

Certain debts cannot be included in an IVA such as; criminal court fines; debts obtained by fraud; child support arrears and most student loans.

IVA Fees

We do not charge any upfront fees for drafting and submitting your IVA Proposal. We only put an IVA case forward if we believe it will be a successful one for both you and your creditors. Even if your IVA proposal is unsuccessful, you will not be charged a penny.

Once an IVA is approved fees are applicable. The fees for an IVA are all set by the creditors (no matter which provider you use), so if your IVA application is successful, the only thing to worry about is whether you have chosen the right Insolvency Practitioner.

All fees are taken out of your affordable monthly payment or from your agreed lump sum payment, so you will never be asked for additional fees or receive a bill from us. See more about fees.