What is an IVA?

An IVA or Individual Voluntary Arrangement is a legal process that allows a debtor to prevent bankruptcy by coming to an agreement with his creditors to pay off a certain percentage of his debts over a given period.

Your repayments are calculated through an analysis of the your income and expenditure. Once agreed, your repayments are legally binded by a contract, although the creditors can still force you into bankruptcy if you not meet your side of the deal.

If you are a homeowner, you will normally be required to release any equity you have in your property by taking out a secured loan or a remortgage and paying this money to your creditors. Once your creditors have agreed an IVA, all your charges and interest on your unsecured debt will be frozen.
Your IVA supervisor is required to review your financial situation each year and if there is a change in your financial circumstances (salary increase) then you may be required to increase your contribution towards your IVA.

IVA's don't have the stigma that is connected to bankruptcy, so the impact on the reputation is minimal. IVA's are not advertised in the local newspaper, unlike bankruptcy. However, they are recorded on the IVA register held by the DTI.

If you have debts under £12.5k then there is likely to be an alternative solution to help reduce your debts. One such solution is an informal payment plan (IPP). This is an informal process of negotiation with unsecured creditors to obtain a reduction in the repayment amount or a reduction in interest charges. The negotiation involves providing proof to the creditor that the individual is unable to meet their repayments.

If you wish to find out more about our IVA's then please enter your details into our enquiry form and one of our advisors shall contact you with some free advice.