An individual voluntary arrangement (IVA) is a formal & legal agreement, between you and your creditors, that agrees on a monthly repayment plan over a period that condenses multiple unsecured debts into one monthly payment.

It is a formal, legal debt solution negotiated by an Insolvency Practitioner that both you and your creditors are obliged to stick to. The Insolvency Practitioner will deal with your creditors throughout the life of the IVA, freeing you from any stress and worry dealing with them directly.

An IVA is a form of insolvency, but it is different from bankruptcy

How Does an IVA Work?

If you decide to get an IVA, you will work out a repayment plan with an insolvency practitioner. The repayment plan is put to the creditors and, upon agreement, you will pay back a set amount each month, usually for five years, but not always. Since an IVA proposal is usually a last resort for people who cannot afford repayments currently, most creditors recognise you are making an effort to repay what you owe.

Write Off Debt With an IVA

Government debt legislation means that you may be entitled to write off a large portion of your debt based on your circumstances, affordability and the full amount of debt. IVAs are suitable for people with a considerable debt level and as such you are only expected to pay back what is reasonably affordable for you on a regular basis.

Benefits of an IVA

• An IVA can protect your owned assets, such as your home, by preventing your creditors from forcing you to sell up to pay them back
• All interest payments on your unsecured debts including your credit cards and store cards are stopped
• On approval, any current or potential legal action relating to your debts is prevented; this also stops late payment charges and fees, giving you the reassurance that your debt has stopped growing. This does not include debts outside the IVA such as Student Loan, Child Maintenance arrears, or the current years council tax.

Disadvantages of an IVA

• Not all debts can be included in an IVA, for example student loans, child support and maintenance, magistrate court fines and social fund loans are excluded from an IVA, but an allowance can be given to enable you to continue repaying these.
• Creditors may not approve your IVA
• If you become entitled to any windfalls or inheritance money over and above £500 during the term of the IVA these funds are to be introduced into the arrangement.
• If you fail to make the payments due under the terms of your IVA, your arrangement could fail, which in turn could lead to you being made bankrupt

Are There Fees on an IVA?

Before entering an IVA, you need to be aware that fees are involved. Your creditors are agreeing to accept less money back to pay your insolvency practitioner. The only exceptions to this are if you have a significant change in circumstances or a windfall during the IVA and are able to pay back your debts in full or if your IVA fails. In these circumstances, your creditors may require you to contribute an amount to cover fees on top of your debts.

Will an IVA work for me?

An IVA can be a positive way to manage your debts, however, to be eligible you must meet the following criteria:

• Have £6,000 or more of unsecured debt
• Owe money to two or more creditors
• Live in England or Wales
• Have a steady income and consistently be able to make at payment of at least £85 per month