What is an Individual Voluntary Arrangement (IVA)?
'
Individual Voluntary Arrangements' were introduced in 1986 as part of government legislation as a better alternative to bankruptcy. They provided people with a way to deal with their debts without extreme long term consequences.
The arrangement is a legally binding agreement between you and your creditors. Due to its formal nature, an
IVA has to be set up by a licensed professional called an
Insolvency Practioner (IP). The arrangement usually lasts for a period of up to five years, after which you will be clear of the debts included in your arrangement.
What does the IVA entail?
Essentially, the
IVA offers a chance for you to contribute one affordable monthly payment towards your debt. This continues for the length of the
IVA, after which any outstanding debt is 'written off'. The amount written off depends on your individual circumstances and can be as much as 60-70% of the debt.
Any interest and debt charges will be frozen and creditors will be prohibited from demanding additional payments. Any assets, such as your home and car are usually protected under the
IVA.
What will an IVA cost me? »How can the IVA be set up?
The
IVA process can begin through either one quick and confidential phone call or the online application. All we need are a few details about your situation and the unsecured debts you have. You will not be committed to anything after the initial phone call so you have time to evaluate your options.
What are the advantages of an IVA?
No professional disqualification with an IVA
An
IVA does not affect your professional status or the ability to hold public office. Your employment status will not be affected, even if you are a company director, accountant, police officer, or are in the armed forces.
Free of debts included in the IVA in 5 years or less
An
IVA lasts for a fixed period of time, normally five years. Once you have completed your IVA according to the specified terms then all the unsecured debts included in the IVA are written off.
An IVA provides protection from creditors
Once an
IVA is in place, your creditors are not allowed to take further legal action against you as long as you stick to the terms of the arrangement. They are not allowed to demand payments from you either by telephone or letter.
Interest and late payment charges frozen
Once an
IVA has been agreed, your creditors are not allowed to add any interest and late payment charges.
Single affordable monthly payment
At the beginning of the
IVA, a monthly repayment amount is set based on what you can afford to pay each month.
An IVA is a fixed, legally binding agreement
The
IVA is a legally binding agreement between you and your creditors, which means that they may not make any changes to it once agreed.
Repaired credit rating
Once the
IVA is completed successfully, your credit rating will start to improve.
Your assets are protected
Any assets, such as your home and car are usually protected under the terms of the
IVAWhat are the disadvantages of an IVA?
Minimum level of debt
An
IVA is only suitable if the debtor has unsecured debts of at least £15,000. In addition, you will need to be able to afford a monthly payment of at least £200.
An IVA is a formal, fixed agreement.
If you do not comply with the terms of the agreement, you can still be made bankrupt
No unsecured borrowing allowed
It is in the terms of an
IVA that no further credit agreements may be entered into. Further unsecured borrowing including the use of store cards and credit cards, could result in a failure of the
IVA.
Possible release of home equity
If there is equity in your house, or you have an endowment policy tied to your house, an
IVA may require that you release the equity to pay your creditors.
Credit rating affected
The
IVA will be noted on your credit file, and you will only be able to start improving your credit score once it is completed.
Free IVA advice
Act now. Call us on
0800 16 999 46 or simply fill in the online application form above. Initial
advice is free and completely confidential so why not give us a call today...
Insolvency Practitioners at Money Debt and Credit Ltd act without any personal liability
Money Debt and Credit Ltd, Registered in England & Wales No.05588842.
Registered Office: 45 Clarendon Road, Watford WD17 1SZ