IVA | Individual Voluntary Arrangement | IVAs
Write off debts you can't afford with an IVA
Under this government initiative you need to show that you cannot afford your debts.
This is done by showing that your monthly living costs including debt repayments are more than your monthly income.
You agree to pay a monthly amount that you can afford and at the end of the plan any remaining debt is forgiven and written off. On average, our clients achieve a debt write off between 60-70% of their debt.
An IVA is the right choice for you if:
- You have debts over £14,000
- You can afford to pay at least £140 each month
- You are struggling to repay your monthly creditor payments
- An IVA may be right for you and you could have a large portion of your debts legally written off.
So, what is an IVA?
An IVA ( Individual Voluntary Arrangement ) is a government solution created to help people clear their debts instead of going bankrupt. With an IVA you only pay back what you can afford to pay each month.Because an IVA is legally binding, your creditors cannot alter the terms of the agreement at any stage.
The duration and payments of an IVA are fixed. In most cases a large portion of your debts are legally written off . This means you could only pay back a small percentage of your debts. You will know exactly when you will be debt free.
Will you still be able to afford things?
In an IVA you will have an agreed budget for your all your living costs. There are allowances made for this in the agreement. These expenses will be mostly based on what you currently have to pay out each month. You should declare all normal monthly expenses to your creditors so they understand your situation more clearly. There may be some restriction on some expenditure items, such as mobile phone for example.
Your IVA payment is what is left after all your living costs have been taken into consideration.
How does an IVA work?
In order to set up an IVA an Insolvency Practitioner is required to set up and negotiate the IVA terms with the creditors. An IVA is a legally binding process and once you enter into one you will no longer be contacted or harassed by your creditors.
Each IVA is different. The terms of your IVA depends on your employment status, income, expenditure, amount of unsecured debts, number of creditors and how you spend your money generally. Your IVA repayments to the creditors are established by analysing all of these factors and coming to a legally binding agreement on the monthly repayments. There then is a meeting with each of the creditors to decide if they want to agree to the IVA and if more than or 75% of your creditors, by debt value, agree to the terms the IVA can begin, and you are on your way to paying off your debts and becoming free of debt.
- 1 easily affordable monthly payment based on your income and expenses
- An IVA offers you protection from creditors
- Creditor pressure is stopped as creditors must deal with a Debt Management Company
- Most IVAs last for 5 years (sometimes longer). Some last only months
- All interest is frozen immediately
- Suitable for tenants, homeowners, business, singles, couples
- IVA can set up in as little as 4 weeks
- Only 75% of your creditors (by debt balance) need to accept your proposal to make it legal
- If you are a homeowner with equity in your property you may be required to introduce part of your share of this equity in the final year of the arrangement. A remortgage may be restricted and on less favourable terms. If for some reason you can't be extended for up to another year.
- If your circumstances change, and your insolvency practitioner can't get creditors to accept ammended terms, the IVA is likely to fail. You will still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your IVA.
- If your IVA fails, your creditors may request that you be made bankrupt. This will always be discussed before your arrangement commences.
- Your credit rating may be impacted for up to six years from the commencement of the IVA.