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The Individual Voluntary Arrangement (IVA for short) is a formal, legally binding agreement between you and your creditors and serves as a debt management tool to help those in financial difficulties settle their debts
On this page we take a detailed look at the Individual Voluntary Arrangement (IVA), how it works, and how it compares to other forms of debt management, along with details of how we might be able to assist you.
Table of Contents:
An Individual Voluntary Arrangement (more commonly referred to as IVA for short) is a formal and legally binding arrangement between you and your creditors.
The Individual Voluntary Arrangement is one of the debt management tools to help those in financial difficulties settle their debts. Within the terms of the IVA you will have come to an arrangement to pay reduced amounts towards your total indebtedness, expressed as a percentage of what you owe.
Individual Voluntary Arrangements have to be set up by a licensed Insolvency Practitioner and usually last for 5 years. On successful completion of your IVA, you will be considered as being debt free, even though it's unlikely that you have paid off all your indebtedness, and you are then able to make a fresh financial start.
The main reasons to consider an Individual Voluntary Arrangement as opposed to a Debt Management Plan are as follows:
Other forms of debt management include:
It will depend upon your personal circumstances as to which route you should follow. Your financial management should always start with prioritising your debts, and the golden rule is to ensure your main priority is your mortgage borrowings, and any other loan that is secured to your home. Failure to repay your mortgage or other secured debts could result in you losing your home.
It really is important that you don't ignore your other creditors either. Contact them in writing and explain that you are currently experiencing difficulties with your payments, and are taking steps to sort out your financial affairs. Advise them that it will take a little while, but will contact them again within the next 2-3 weeks. Ask in the meantime that they do not take any further action.
You should now consider your options.
It's highly likely that you have more expenditure going out each month than income coming in! However, if you are a homeowner and have sufficient equity in your property, there's a strong possibility that you may be able to reschedule your finances by consolidating your debt, and replacing all your outgoings with one manageable monthly repayment by remortgaging. It may be worth your while giving one of our mortgage advisors a quick call - they'll be more than happy to discuss the options open to you, and provide you with a fast in-principle decision, together with an indication as to cost. You should be aware that rescheduling your debt over a longer period will result in you paying more interest, as well as converting the loans from an unsecured basis to being secured.
If you do not have equity in your property, then you will be faced with arranging reduced payments to your creditors, and it may well be worth approaching a professional Debt Management Company who will explain and recommend the most appropriate route for you, whether that be a Debt Management Plan, IVA, Administration Order, or even Bankruptcy.
If you are faced with choosing between a Debt Management Plan and an IVA, it's well worth taking into account that once an IVA is approved, it is legally binding, and your creditors cannot apply any further interest or charges, or request an increase in your payments, whereas other forms of debt management plans can continue to apply interest and pressure you for increased payments. So if you think the most suitable route would be an IVA or other Debt Management Programme, we'll be happy to put you in touch with a reputable and professional Debt Management Company. Just give us a call on Freephone 08000 282 281.
The object of recommending you for an IVA is to provide a legally binding, formalised agreement between you and your creditors, in order to settle your debts within a reasonable and fixed period of time, which is usually 5 years. During this period all interest and debt charges will be frozen, and your creditors will be prohibited from demanding additional payments.
Your appointed Insolvency Practitioner (IP) will require a considerable amount of financial information from you, including evidence of your income, together with a statement detailing the amount owed to your creditor, as well as your other household expenditure and outgoings. The Insolvency Practitioner will then draw up a set of proposals and apply to the courts for an Interim Order, and once in place, this will ensure your creditors take no further legal action against you.
The Insolvency Practitioner will then arrange a creditors meeting. This meeting is crucial, and will determine the outcome of your IVA plan when your creditors vote for or against it.
Conditions for the IVA to be approved or fail:
Once aproved, the Insolvency Practitioner's role becomes that of the Supervisor. He will be charged with the duty of monitoring the progress of the IVA, ensuring the terms and conditions of the IVA are met, and for distributing the proceeds received to the creditors on a pro rata basis.
During the course of your Individual Voluntary Arrangement, your financial situation will be regularly reviewed to assess any change in your circumstances. The affordability of your payments is based on your income less your expenses. It is your responsibility to ensure these payments are made. If you do not keep up your repayments in accordance with the agreement, the IVA will fail, and your creditors will be free to pursue you.
Obviously, we will carefully examine your circumstances, and consider all the options available to you. If we think the most suitable solution is the IVA route, or some other form of debt management, we are able to refer you to professional debt practitioners.
If you are buying your home, then you will be expected to realise some of the equity you have built up in your property, so that it can be repaid to your creditors. This is usually done at the end of the five-year agreement. It is a realistic method that will permit you to retain your home, and although this may appear to be harsh, it will normally be a paramount factor in whether or not the creditors will approve the IVA at the outset.
Generally speaking, yes we can!
Remember our qualified Mortgage Advisors are available seven days a week to discuss the options open to you. Naturally, we'll carefully look at your needs, requirements and aspirations and come up with the most appropriate solution for you, regardless of your circumstances.
So if you think we can be of assistance, why not call us today on Freephone 08000 282 281, our lines are open from 8am until 10pm (and that includes weekends), alternatively you can also enquire online at any time. You'll find our approach to be friendly and professional and not judgemental. We have an extensive portfolio of lenders and specialist mortgage products to help even in the most difficult situations. We provide a comprehensive and personal service. So please don't hesitate to Contact Us if you would like to discuss your requirements, naturally without obligation! We'd love to hear from you and we'd be delighted to provide you with an in-principle decision - whatever your circumstances!
Well we hope we've managed to explain IVA's satisfactorily and have answered any initial questions you may have had about them.
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There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
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