What is an IVA?

IVA is short for Individual Voluntary Arrangement. It is a legally binding agreement that enables you to:

• Become debt free
• Avoid bankruptcy

Important - An IVA is not something you can do yourself. A licensed insolvency practitioner must arrange and supervise it.

An IVA should be tailored to your circumstances and is based only on what you can afford to repay. It will involve you making either:

• A lump sum payment for full and final settlement
• Monthly repayments
• Combination of both

What are the benefits of an IVA?

The main benefits of an IVA are as follows:

• Debt free in 5 years (Usually)
• You only pay what you can afford
• A more favourable treatment of your assets as you have a say. Hence, you should be able to keep your house
• You will no longer be hassled by your creditors
• No legal action from creditors
• You do not suffer the restrictions of bankruptcy
• Under an IVA you avoid prosecution for retrospective bankruptcy offences
• Not advertised in the press
• Professional status is usually unaffected so you can continue with your chosen profession (unless employment contract specifies otherwise)
• Continue to operate your business (unless deeds or articles state otherwise)
• Your creditors will get more than if you decided on bankruptcy

What are the consequences of an IVA?

• You will need a disposable income to qualify
• All your assets are considered when producing the proposal. You may need to release equity in your house
• You will have to disclose the true state of your finances
• If you do not keep up the repayments you may be declared bankrupt
• If there is a change in your circumstances for the better then you may have to pay more
• The IVA will be recorded in a public register
• Credit reference agencies will record the IVA on your credit record

How much will I have to repay?

The amount you repay during the IVA is usually expressed as a percentage or as the number of pennies in the pound. This is why you see some IVA companies promoting through messages such as "Wipe up to 75% of your debt". In this instance you would only repay 25% of what you owe.

There is no fixed amount that you have to propose for the IVA. It is whatever the creditors decide to accept from you. Once the IVA is in place though, it is important that you keep to the terms.

You should realise that your creditors will expect you to contribute as much as you can towards your debts. As with any debt solution the IVA is no easy route out of your debt.

Who is an IVA for?

Any individual can apply for an IVA. This includes employed persons, self employed or individual members of a partnership.

You must have unsecured debts in the thousands.

You must have a regular income with enough spare income to qualify.

Many people who apply for an IVA do so to avoid bankruptcy. Through an IVA you should be able to keep your property.