What is an IVA?

An IVA (Individual Voluntary Arrangement) is a legally binding agreement between you and your creditors. The IVA will normally last 60 months and during this time you will be expected to pay an affordable monthly payment. An IVA has to be set up by a licensed professional called an Insolvency Practioner (IP). All unsecured debts must be declared into an IVA.

What is the Purpose of an IVA?

The IVA helps people who can not afford to maintain there contractual payments to make a formal proposal to settle their unsecured debt within a set period of time. (Normally 60 months).

All interest and charges will be frozen on the accounts and creditors will be prohibited from demanding additional payments.

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How are the monthly payments calculated?

Monthly payments to the IVA are based on what you can afford – this payment will be pre calculated by one of our expert debt advisors before any agreement takes place and can payments can vary during the 60 months only if you financial situation changes.

Once the final payment is made to the IVA, any outstanding debt is legally written off normally around the 60/70% mark. Homeowners may be required to release equity at the end of the 4TH year, however, your home is never at risk.

How does an IVA work?

Once a decision has been made that an IVA is right for you, we will complete a full fact find with you to establish how much you can afford to pay. For an IVA to be approved, creditors will be called upon to vote either for or against the IVA.

The IVA is a legally binding agreement and you must maintain the payments for the full term and then you will be free from the debt regardless of how much has been paid off.

During the period of your arrangement your financial situation will be reviewed annually to see if there has been any change in your circumstances.

Once the IVA is accepted the IP's role becomes that of supervisor, monitoring the IVA's progress and ensuring that the terms and conditions that were agreed to at the creditors meeting are properly adhered to.

It is your responsibility to pay the agreed payments to the IP who will then ensure that these payments are distributed to all creditors on a pro-rata basis until the successful completion of the IVA. It is in the debtors own interest to maintain their payments as failure to pay will almost certainly result in the failure of the IVA.

Upon the successful completion of the IVA you will be considered debt free. Any outstanding balances are written off.

It is worth noting that if you do enter into an IVA with your creditors and you have an endowment policy linked to your mortgage then you may be expected to cash it in and pay the proceeds into the arrangement.

Likewise, if your property has a reasonable amount of equity then it is likely that some of it will have to be released during the arrangement (usually in the 4th year) so it can be paid to the creditors.

Drastic as this may sound it can be a deciding factor in whether an IVA is approved by creditors and a realistic way in which you can retain your property.

What Are the Differences between a DMP (Debt Management Plan) and an IVA?

Although a DMP may greatly reduce your repayments each month, you will still have to pay all of your debt back.

Your creditors do not have to stop adding interest and late payment charges. Some may for a short period (perhaps 6 months).

Creditors may want to review the situation. This means that the reduced amount paid each month may only just cover the extra interest being added. If this is the case, then the debt will never be repaid.

Your creditors can break the agreement at any time and asked for increased payments or add further interest.

Not knowing where you stand with creditors, may have you always waiting for that next payment demand letter to come through the post.

Why use an IVA?

You have an agreement within the IVA to make a single reduced payment each month.

The IVA lasts for a sensible period of time (normally 60 months).

Once the IVA is agreed, creditors are not allowed to add further interest or charges to your accounts by law.

The IVA is fixed, meaning that creditors cannot randomly demand changes to it.

Can debt solutions help me get out of debt?

YES we can. Everyone’s personal situation is different and each debt solution is different so we need to work out which will best suit your financial needs.

We will complete a FREE 20 minute fact find with you to work out what your earning and spending and this will let us know how much you can afford to pay to your creditors and also which debt solution is best for you to help you get out of debt. You are under no obligation but I am sure you will be 100% happy with what out debt advisors can do for you and we have the lowest debt managenent fees in the industy

We pride ourselves in our friendly, professional approach to finding the right debt solution for every one of our clients, which is honest, confidential and always the ‘best advice’ based on your individual circumstances.

If you would like to speak to one of our friendly, professional debt experts about any of our debt solutions you can either call our debt solutions helpline on: 0845 159 6093 or complete our online contact form and one of our debt advisors will call you back within the hour.

Start you debt free life today! with one of our debt solutions.

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