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An IVA (Individual Voluntary Arrangement) is a government backed legal agreement with creditors (usually non-priority creditors) to repay your debts. This could either be in part or in full. The arrangement is negotiated, written up and checked regularly by an independent solicitor or accountant called an Insolvency Practitioner. Not all the creditors have to agree to an IVA as long as the creditors to whom you owe 75% of your debt agree.

An IVA could be the solution if there is no real prospect of paying off all your debts.

With the help of a licensed insolvency practitioner, you work out what you can realistically afford to pay back over a period of time - usually 5 years though sometimes less. If three-quarters of your creditors agree, all your debts and the future interest on them will be frozen at the time that the IVA proposal is agreed.

Your creditors will usually forego some of the debt you owe (up to 70%) and at the end of the agreed period these debts are written off provided you have kept up with the negotiated monthly IVA payments. As long as you are confident you can maintain the regular monthly payment that is agreed an IVA could be the solution for you and you could be debt free in 5 years or less.

The Advantages of an IVA

  • All interest and charges are guaranteed to be frozen
  • Stops demands and contact from your creditors
  • IVAs are backed by recent government legislation
  • Write off any debt you cannot affolrd to pay
  • Lenders cannot take legal action as long as you maintain the agreed monthly payment
  • We do not charge any client fees

Things to bear in mind with an IVA

  • You must be technically insolvent i.e. not in a position to be able to meet the payments on your debts
  • You must have unsecured debts totalling at least £15,000
  • You must have a disposable income of at least £250 per month
  • If you default on payments, your creditors could make you bankrupt
  • Although it is rare, creditors could require you to release equity that may have built up if you are a homeowner at the end of the IVA term
  • Defaults will be recorded on your credit file, which can last up to 6 years from the start of the IVA

Useful Links

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Questions & Answers about IVAs

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