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.
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 are based on what you can afford, not how much you owe.
Debts can’t increase
Interest and charges are frozen, so your debts don’t grow.
Legal protection
Creditors cannot pursue you for their debt or take legal action.
Debt written off
Once you’ve made the agreed payments, any remaining money owed is written off.
Knowing when you’ll be debt free
A fixed agreement usually lasting 5 years, after which any remaining unsecured debts are written off.
Your home is protected
An IVA can help safeguard your property and keep things affordable, even after the IVA ends.
Avoids bankruptcy
You can carry on trading if you are self-employed or run a business.
Catches debts you didn’t know about
An IVA can include debts you weren’t aware of, such as unpaid tax or overpaid tax credits.
Less stress, more control
Contact from creditors stops and your payments are affordable, so you can regain control and work towards debt freedom.
IVA considerations
As with any insolvency process, entering an IVA has consequences:
An IVA can fail
If you don’t keep to the agreed terms and don’t talk to your IVA provider, your arrangement may fail.
Risk of bankruptcy
If your IVA fails, your creditors could take action against you, which may include bankruptcy if you owe £5,000 or more.
Limits on spending
Your spending is expected to stay within set guidelines, although justified exceptions can be considered. You won’t be expected to live in poverty.
Assets are taken into account
If you have assets, such as savings plans, you may be asked to make them available to your IVA.
Your property
If you own your home and meet certain conditions, you may be asked to remortgage in the 5th year to release some equity for creditors. Often a remortgage isn’t required, and we can explain why. If one isn’t available, the IVA is usually extended by 12 months instead.
Your credit rating
An IVA stays on your credit file for 6 years from the date it starts. During this time it may be difficult to get credit.
No guarantee of acceptance
Creditors can reject an IVA, usually for specific reasons. We can negotiate with them or re-propose the IVA if needed, and we only put forward IVAs we expect to be approved.
Not private
An IVA is entered on a public register, although someone would need to be looking for you specifically to find it.
Not all debts can be included
Most debts can go into an IVA as long as they are not secured on an asset, such as a mortgage. Exceptions include child maintenance arrears, car finance while you still own the vehicle, rent arrears, certain court fines, student loans, and utility bills with your current provider. If you’re unsure about a debt, contact us.
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
Catalogues & 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.