IVA

An IVA is a Legal agreement between you and your creditors where you will come to an arrangement with the creditors you owe money to. You make reduced payments towards the total amount of your debt in order to pay off a percentage of what you owe. After 5 years your debt is written off. Due to its legal nature, an Individual Voluntary Arrangement - IVA has to be set up by a licensed professional called an Insolvency Practitioner or IP.

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How does it work?

Debts are written off after a fixed period of time (normally 5 years). Any interest and debt charges will be frozen and creditors can not demand additional payments.

The Individual Voluntary Arrangement - IVA is legally binding. As long as you keep up repayments, when the 60 months is up, you will be free from these debts regardless of how much has been paid off.

During the period of your IVA, your financial situation will be reviewed regularly to see if there has been any change in your circumstances.

You make one single manageable monthly payment, based on your budget, for 3-5 years. After that the remaining debt is wiped clean, leaving you completely debt-free. This means that an IVA can write off up to 75% of your debts

If your creditors do vote in favour of an IVA you will be put on a payment plan where you will pay an affordable, set amount every month, usually for a period of five years. This amount is distributed between your creditors based upon how much you owe each one. Your repayments will then cease. Under an IVA assets such as your home are protected. Creditors cannot contact you and try and get money off you once this arrangement has gone ahead (an interim order is normally put in place whilst the IVA is being set up to stop them from doing this in the early stages as well). Also, interest and charges on your loans will be frozen once the IVA is set up.

Around 44,000 people entered into an IVA in the 2006, double the previous year, and the figure is expected to grow to 100,000 by 2009.

There is expected to be a sharp rise in the take up of Individual Voluntary Arrangements in the next 12 months fuelled by excessive spending over Christmas, the prospect of higher interest rates and rising energy bills.

To Apply for the IVA

The application and set up process takes around 4-6 weeks from the point of application, including activities such as fact finding, collection of evidence, drafting the IVA proposal, reviewing and signing, sending to creditors, and voting (we do this, all you have to due is provide the information we ask for). A final draft proposal will be sent to you for your acceptance before a creditors meeting takes place.

Creditors Meeting

The meeting of creditors is where the creditors can choose to accept or reject your IVA application. Creditors can reject the IVA if the offer you make is not enough. We only put you forward for an IVA if you "fit" the criteria. Our IP has been in this industry for 15 years and we are ware of all the latest requirements of all the major creditors.

You do not have to attend the meeting. It would however be helpful if you were available on the phone just in case we need to talk with you.

The systems we have in place insure a no stress, fast effective service. We have the latest systems that enable us to draft your proposal quickly.

Pros and Cons

Pros - Affordable payment - write off your debt - 60 months and then debt free - no upfront charges - house and car protected - proposal for IVA controlled by you, not the creditors

Cons - No more borrowing for 5 years - credit rating effected for 6 years - default on IVA could mean bankruptcy or Debt Management

Examples of the IVA

Example 1

Mr & Mrs Roberts from Sheffield came to us with debts of £45,000. Some were in his name and the rest were in joint names. They were paying credit cards with credit cards hoping their situation would change. They were renting and both were working full time. Mr & Mrs Lewis were paying out £1100 per month towards their cards and loans. After we looked into what they could afford to pay, we put together an IVA proposal for 60 months at £370 per month. This means they would pay back £22,200. The payment was affordable to them and accepted by their creditors

Example 2

Mr and Mrs David from Durham have 3 children under 10, and a total debt of £32,000 on loans and credit cards They also have a car on H.P. which is essential for Mr Jones to travel to work. They currently pay out £500 per month leaving them with an ever growing overdraft facility. Their outgoings leave them with no money at the end of each month. They agreed to repayments of £250 per month for 2 years and £350 in years 3, 4 & 5 as the car H.P ends in 24 months (2 years). They get to keep the car and have a new Bank account and no overdraft. In total they will pay back £18,600 over 60 months in the IVA.

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0800 043 4133