www.debtemergency.co.uk
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Debt Management & Debt Advice Freephone 0800 634 5521
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"It allows the debtor to propose to the creditor a much lower final settlement of the debt."
© Debt Emergency
Debt Management & Debt Advice
Debt Management & Debt Advice
Q.
"What is IVA - Individual Voluntary Arrangement?"
A.
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Freephone:
0800 634 5521
0800 634 5521
- What is an IVA?
- How long does an IVA last?
- Who can benefit from an IVA?
- How much does it cost to set up an IVA?
- Will taking out an IVA affect my credit rating?
- What happens at the end of an IVA?
- Advantages of an IVA?
- Is there any form of professional disqualification with an IVA?
- Can I keep my assets with an IVA?
- What if some of my creditors do not agree?
An IVA, also known as an Individual voluntary arrangement is a legally binding contract between an individual in debt (debtor) and those he/she is in debt with (creditors). This was introduced by the government as part of the insolvency act 1986 as an alternative to bankruptcy.
An IVA offers to pay the amount a debtor can afford into a fund over a period five year period. This amount which is paid via an IVA is far less than the total debt, however is accepted as a final settlement by all the creditors to clear the debt.
An IVA offers to pay the amount a debtor can afford into a fund over a period five year period. This amount which is paid via an IVA is far less than the total debt, however is accepted as a final settlement by all the creditors to clear the debt.
IVA's normally last for 5 years, it is however possible to clear an IVA in a shorter period especially if the individual can produce a lump sum.
Anyone who is living in England, Wales or Northern Ireland with debts over £15,000 and in regular employment. For residents of Scotland we can have a (Standard Trust Deed) set up which is an equivalent to an IVA. Ask our advisors.
We do not charge you any fees to set up an IVA, these are agreed with and paid by your creditors as part of an IVA. Any costs of the insolvency practioner for supervising the agreement are also included in the arrangement, hence all you have to do is agree to keep up with the repayments over 5 years, and any debt you cannot afford to pay will be written off by your creditors.
An IVA is set up based on the fact that you can not afford to pay off your debts, therefore whilst the Insolvency arrangement is in place you are not allowed to take out any further unsecured credit such as credit cards, personal loans, etc. A note will be put on your credit file which alerts potential lenders to the fact that you have entered the agreement. The note remains on your file for a total period of 6 years, where your IVA lasts for 5 years. Some lenders will lend at higher rates than your standard high street rates and some may not wish to lend altogether. However you can find lenders who specialise in giving credit to those wih previous credit problems. If you require such information please contact us, we will be happy to help.
At the completion of an IVA, the supervisor (usually an Insolvency practioner) will give you a 'statement of completion', this is given within 3 months of the final payment, a copy of this will also be sent to the insolvency service for there records, and you will be debt free at this stage.
- Up to 75% of your debt can be written off with an IVA
- The payment amount is the same over the 5 year period unless your circumstances change and you wish to increase the repayment.
- Once the IVA is agreed all of your creditors are legally bound by it as long as you keep paying the agreed sum.
- Further action is stopped
- Interest is frozen
- After your agreed term is over you can stop paying your monthly sum and can make a fresh start.
- Unlike bankruptcy, an IVA is a private agreement between you and and your creditors. This means that no one else needs to be told about it, As a result there is never any publicity in the local newspapers about IVA’s as is the case with bankruptcy.
- No professional disqualification takes place with an IVA
- Your assets will not be taken away
- Your monthly instalments are based on what you an afford
- Your creditors cannot harass you whilst the IVA is in place
- Once the IVA has been completed then you are deemed to be debt free.
There is NO form of professional disqualification with an IVA.
With an IVA you can promote, form or manage a company without the permission of the court, your employment status is not affected, you can even carry on running your own business as a director, unlike bankruptcy.
With an IVA you can promote, form or manage a company without the permission of the court, your employment status is not affected, you can even carry on running your own business as a director, unlike bankruptcy.
If the debtor is made bankrupt then all of their assets will be vested in the trustee and they may be sold to repay the debts, however with an IVA you can keep your home and other assets as long as you keep to the agreement.
If at least 75% of the creditors you owe money to accept the proposal then the IVA is usually accepted. However there does tend to be a minimum amount the creditors will accept as part of the proposal. An IVA is usually rejected if it offers to pay less than 20-25% of the total debt value owed. If the proposal is rejected then we can look at an informal arrangement or bankruptcy. However bankruptcy is a last resort.
