IVA (Individual Voluntary Arrangement) and it's meaning

Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement or IVA as it's commonly referred to, is a debt solution that was introduced by the government in 1986.

What is an IVA?

An IVA is a legally binding agreement between you and your creditors which allows you to make an agreed monthly repayment which is normally fixed for 5 years.

An IVA consists of paying an affordable amount each month back to your creditors based on an independent assessment of your total income and expenditure.

IVAs are specifically for unsecured debts such as personal loans, bank overdrafts, store cards and credit cards. Secured loans such as vehicle H.P. agreements and mortgages are not allowed to be included in your IVA.

Your IVA proposal will be put to your creditors to vote on by a licensed insolvency practitioner, usually referred to as an I.P.

Your IVA must be approved by 75% of your creditors by value in order to go ahead with the process.

Do I qualify for an Individual Voluntary Arrangement?

As with all debt solutions, it's not possible to give a yes or no answer without talking over your exact situation with a professional debt advisor first.

There are however some generally accepted IVA guidelines, including;

Your unsecured debts should be £15,000 or more, you should also have at least 3 different creditors,

You'll need to have a regular source of income; you'll also need a disposable income of at least £200 per month after paying your secured debts and reasonable living expenses

It's also important to bear in mind that an IVA is legally binding so if you fail to keep up with your repayment schedule without good reason, your creditors could petition for your bankruptcy.

What types of people have IVAs?

People apply for Individual Voluntary Arrangements for a number of reasons, including those below;

Wanting to keep control over their home, unlike in bankruptcy, have a level of debt they would never realistically be able to repay in full, those who can't go into bankruptcy because they would lose their job, are committed to becoming debt free by making an ongoing commitment.

Some quick IVA facts

IVAs are not available in Scotland, the equivalent is called a Trust Deed, an IVA will affect your credit rating, usually for 6 years, if you make all your agreed monthly payments for 5 years, you will be debt free, your IVA must be set up and looked after by an Insolvency Practitioner, your creditors reserve the right to refuse your application for an Individual Voluntary Arrangement.

Get in touch with a IVA expert today to get rid of your debts.