Outline of an IVA
The IVA, or Individual Voluntary Arrangement, came in with the Insolvency Act of 1986 and is an agreement with your creditors to pay a reasonable amount each month, usually for 60 months. After this time, you’re debt free, whether you’ve paid off the whole debt or not. They’re legally binding, which means you and your creditors both know where you stand.
- To qualify, you need at least £12,000 of unsecured debt and more than one creditor. IVAs aren’t available in Scotland, where they have something similar called a Trust Deed. You’ll have to prove that you’re unable to keep up with your debt repayments; it’s not just a way to dodge paying off your debt in full.
- Your creditors will rarely accept any IVA that returns less than 30% of the debt. In order to have it accepted 75% of your creditors must be in favour. This percentage is defined in terms of value rather than by creditor headcount.
- In order to show you’re repaying as much as you can afford. In order to do so, you might be asked to relocate to somewhere with cheaper rent and cut down on your expenditure.
- If you’re a homeowner, you’re home isn’t at risk as long as you keep to the repayment plan. However, you might have to give up some of the equity in your property to service the debt.
- An IVA must be overseen by an Insolvency Practitioner who is licensed to deal with insolvency procedures. Usually, they were formerly Accountants or Lawyers who have trained to qualify as an Insolvency Practitioner. They are the only ones that can propose or administer an IVA.
- The IVA is based on detailed information about your assets, your income and your usual monthly expenditure. You’ll need to provide the Insolvency Practitioner with evidence of all of these things so you’ll need to give them payslips, bills and maybe even a valuation of your property.
- An IVA is a totally private agreement between you and your creditors so you don’t have to worry about the stigma of it being made public.
- If you satisfactorily complete all of your repayments and uphold the points outlined in your IVA proposal, you’ll be debt free and your creditors can make no further claim against you.
If you would like more information, ring Debtsolver now on Telephone 08000 434 336 (Free for UK residents only) or complete our debt management wizard to see if you qualify
