IVA Frequently Asked Questions
Debtsolver have compiled a list of
IVA frequently asked questions as a quick reference guide. For more details, you should read through our IVA uk resource material, and of course you can contact us for free debt advice.
What is an IVA?
An IVA or Individual Voluntary Arrangement is a negotiated agreement whereby a person can have a significant percentage of their debt written off. In an IVA you agree to pay a single, reduced monthly sum into a fund that will be distributed amongst your creditors. IVAs normally run for 5 years, after which you will be debt free. The Individual Voluntary Arrangement was introduced as part of the Insolvency Act 1986, and is legally binding on all parties.
Who can apply for an IVA?
Anyone struggling with severe debt problems and who can no longer meet their monthly repayments can apply for an IVA. Because of the costs involved, debts below £15,000 are not normally considered appropriate for an IVA. You should also be able to contribute at least £200 a month to an IVA to stand a chance of a proposal being accepted by your creditors.
Will I be able to keep my home?
One of the advantages of an IVA over bankruptcy is that you are in a better position to negotiate the distribution of your assets. That nearly always means that you will be able to keep your home, as opposed to bankruptcy where you may be forced to sell your home and the proceeds distributed amongst your creditors.
Will an IVA cover all of my debts?
An IVA only applies for unsecured debts, such as credit cards, personal loans, bank overdrafts etc. An IVA will not cover you against debts that are secured against an asset such as a mortgage or secured loan.
How long does it take to get an IVA in place?
An IVA involves a detailed fact find to determine your EXACT financial and legal position. To do this we have to collect evidence of your personal and financial circumstances, prepare all the detailed legal paperwork and then to distribute the documents amongst creditors. Typically, it will take 4-6 weeks from start to finish, to have an IVA proposal agreed by your creditors.
Will an IVA keep my creditors from taking further action against me?
Once an IVA has been agreed by a majority of your creditors, none of them are allowed to take any further action against you provided you keep up your monthly repayments. They’re not even allowed to contact you.
Once the duration of the IVA is over, you will be debt free and your unsecured debts will be written off by your creditors.
If you are being hassled by your creditors before an Individual Voluntary Arrangement is in place, you can ask an Insolvency Practitioner to apply to a county court for an “Interim Order” (see below) as part of the IVA process.
What is an Interim Order?
An Interim Order can be obtained from the court to give you some respite from your creditors whilst your Insolvency Practitioner prepares an IVA proposal. Once an interim order is in place your creditors may not continue with or start new debt recovery proceedings against you. The interim order remains in effect until the IVA proposal has been discussed at a meeting between your creditors and your Insolvency Practitioner.
Can I apply for an IVA if a Bankruptcy Order or CCJ has made against me?
You can apply for an IVA even if a bankruptcy order or CCJ has been made against you. Once you apply for an IVA, your Insolvency Practitioner will notify the appropriate courts. If your creditors and the court agree that an Individual Voluntary Arrangement is the best solution for all parties, then the bankruptcy order will be annulled once the IVA proposal is agreed.
Can my partner and I enter into a joint IVA?
In principal both you and your partner can apply for a joint IVA. Proposals for joint IVAs are similar to a single one, except that both your incoming and outgoing expenditure would be used to decide on any final agreement.
What happens if I finish an IVA early?
It could be possible that your circumstances change during the period of your IVA, and you should notify your Insolvency Practitioner if this is the case. If you come into a “windfall” sum via a bonus, or inheritance for example, or your circumstances improve, you might wish to pay off your IVA earlier than expected.
Your Insolvency Practitioner can approach your creditors and negotiate a settlement that will allow you to complete the Individual Voluntary Arrangement earlier than planned.
You should note that if you come into any substantial sum of money, a “windfall clause” in your IVA agreement will usually apply, and you would usually be expected to repay your debts in full.
To find out more about how an IVA can help you solve your debt problems, call us anytime 24 hours 7 days on 08000 434 336, or use our online application form.
