IVA
What is an IVA?
An Individual Voluntary Arrangement (IVA) is an agreement between you and your creditors whereby you make funds available for distribution between the creditors bound by the agreement. This usually involves making one monthly payment out of your income for a set period of time and, if you have any assets such as equity in your property, endowment policies etc you may have to make some of this available to creditors as well.
Can I apply for an IVA?
If you are unable to pay your debts as they fall due you may apply for an IVA. This applies even if you have assets that, if sold, would cover your debts. If you are already subject to a Bankruptcy Order you may still apply. If the arrangement is approved, your Bankruptcy is annulled.
What are the benefits?
- Interest and charges on your debts are frozen
- Creditors stop ringing and writing to you - they contact the Supervisor of the IVA
- An IVA gives you protection from creditors by way of a court order
- Once your obligations under the IVA are fulfilled, your debts are then written off
- You potentially avoid bankruptcy
Your credit rating is not as seriously affected as in bankruptcy - You can continue to trade
The disadvantages include that:
- Your IVA is entered on a public register - for more information, see our guide on the Individual Insolvency Register.
- The insolvency practitioner may require payment in advance for preparing your proposal and getting your creditors' agreement
- If there is some equity (value) in your home after taking account of the mortgage(s) on it, you will probably have to pay for your share, usually in the fifth year of your IVA, by remortgaging the property. If you can't get a remortgage, you may have to continue making monthly or quarterly payments from your income, for up to another year.
- If your circumstances change, and your practitioner can't get creditors to accept amended terms, the IVA is likely to fail. You will then still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your IVA.
- If your IVA fails, you may be made bankrupt
IVA's
The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.
In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]
What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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DANGER
Due to the tremendous demand for debt consolidation services the United Kingdom is now overloaded with debt management companies that contain misleading information. [more...]