Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement with your creditors to pay back a percentage of your debts over a set period, usually 5-6 years. At the end of the IVA, any remaining debt is written off. An IVA is set up and supervised by a licensed insolvency practitioner.

Here is how an IVA works:

1. You work with an insolvency practitioner to create a proposal
2. The proposal is sent to your creditors
3. Creditors vote - 75 percent by debt value must agree
4. If approved, the IVA becomes legally binding
5. You make regular payments for the agreed period (usually 5 years)
6. At the end, remaining debt is written off

Creditors cannot take action against you while the IVA is active.

An IVA might be suitable if:

• You owe at least 6,000 pounds (usually more)
• You have a regular income
• You can afford monthly payments of around 100 pounds or more
• You want to protect assets like your home
• You want a fixed end date for your debts
• You have multiple creditors

Benefits of an IVA:

• Debts written off at the end (often 50-70 percent)
• Legal protection from creditors
• One affordable monthly payment
• Can protect your home from being sold
• Fixed timescale - usually 5 years
• Interest and charges frozen
• More private than bankruptcy

Before entering an IVA:

• It affects your credit rating for 6 years
• You must stick to strict budgeting
• Your IVA details are published on the Individual Insolvency Register
• If you are a homeowner, you may need to release equity
• Missing payments could cause the IVA to fail
• Set-up and management fees apply (paid from your contributions)
• Windfall clause - if you receive lump sums, some may go to creditors

If you own your home:

• Your home is usually protected during the IVA
• In year 5, you may need to try to remortgage to release equity
• If remortgaging is not possible, your IVA may be extended by 12 months
• The amount released goes towards your debts
• Your insolvency practitioner will explain what to expect

This is one reason IVAs are popular with homeowners.

Not sure if an IVA is right for you? Our advisers can:

• Assess your situation and explain all options
• Compare IVA with other solutions
• Connect you with reputable insolvency practitioners
• Support you throughout the process

Contact us today for free, confidential advice.