An IVA or Individual Voluntary Arrangement was introduced in 1986 as an alternative to bankruptcy allowing people the opportunity to avoid the stress, trauma and legal ramifications of declaring themselves bankrupt.
Should you be in a position where legal action is being taken against you or bailiffs are visiting you to collect a debt an IVA will provide you with legal protection and stop these actions.
Certain factors must be taken into account when deciding if an IVA is a viable way forward for you:
- You must owe £6,000 or more in unsecured debt.
- You must owe this money to three or more lenders.
- You must have a regular income. (This can be from self-employment)
The majority of IVA’s are structured around one, affordable monthly repayment over a period of normally 60 months. The monthly amount payable is very carefully calculated by taking into account the total household income and all the normal costs of living. This is done to make sure priority commitments such as mortgage payments, rent, utility bills, car finance, council tax etc are not missed and the payment to the IVA is affordable.
Once the monthly IVA payments are set your creditors cannot demand changes. Ongoing IVA payments are subject to your personal circumstances allowing you to pay an affordable amount each month.
It is also possible to offer a lump sum payment to your creditors in full and final settlement if you have this available to you.
On successful completion of your IVA all of the outstanding unsecured debt is written off and you are debt free
Advantages of an IVA:
- You pay one simple, affordable monthly payment to your creditors.
- All the costs and fees involved in an IVA are taken from your monthly payment.
- If you are a home owner your property is protected.
- All interest and charges on your unsecured debt are frozen.
- You are protected from any further court or bailiff action.
- On successful completion of your IVA all outstanding debt is written off.
- IVA’s are not published in your local newspaper as bankruptcy would be.
- It will not affect professions such as the Police Force and Armed Forces, neither will it impact on your ability to hold public office or act as a company director.
Your Commitment In An IVA:
- You will be required to make 60 month’s payments at an affordable level.
- You will agree not to take any further credit for the duration of the IVA.
- Any windfalls, inheritance or bonus’s will be made available to your creditors.
- Inform us of any change in your circumstances.
The IVA Process:
Once it has been agreed that an IVA is the best debt solution for you the following process will be carried out:
- You will be asked to provide documentation which confirms your income, expenses, levels of secured borrowing, etc
- Once this is received we will draft an IVA proposal on your behalf.Once the proposal is signed it is circulated to your creditors and a date for your meeting of creditors is set, you do not have to attend this meeting, but must be available by telephone.
- The meeting of creditors will be held and your creditors will vote on acceptance of your proposal.
- After the meeting has been passed your monthly payments will commence.
- Once all the payments have been made and the terms of your arrangement met you will be debt free.
To conclude, an IVA is a great way for you to offer an affordable monthly repayment to your creditors for a reasonable period of time in settlement of your debts, whilst protecting your home.