IVA AND DEBT MANAGEMENT INFORMATION:
An Individual Voluntary Arrangement - IVA is a formal agreement between you and your creditors where you will come to an arrangement with people you owe money to, to make reduced payments towards the total amount of your debt in order to pay off a percentage of what you owe then generally after 5 years your debt is classed as settled. Due to its formal nature, an Individual Voluntary Arrangement - IVA has to be set up by a licensed professional called an Insolvency Practioner (IP)
Its Purpose?
It is a legally binding agreement between you and your creditors (people you owe money to). It helps those in financial difficulties to make a formal proposal to settle their debt.
What Are The Arrangements?
Monthly payments are based on an affordable disposable income. Once the final payment is made, any outstanding debt is legally written off. The arrangement can write off up to 70% of your debts (subject to your circumstances).
How does it work?
Debts are settled within a reasonable and fixed period of time (normally 5 years). Any interest and debt charges will be frozen and creditors will be prohibited from demanding additional payments.
Who Can Use An Individual Voluntary Arrangement (IVA)?
Anyone can consider an IVA to solve their debt management problem. IVAs have been put in place for anyone, from your blue collar professional to Armed Forces personnel or members of the Police. Your ability to undertake an IVA is not defined by your job or profession.
Who Is Eligible For An IVA?
It will depend on your personal circumstances. Normally your personal debts must be above £15,000 and you should have 3 or more different creditors. You must also be able to offer a reasonable monthly payment to your creditors. This will vary depending on the debt. However, as a guide, you will usually need to be able to afford at least £200 per month.
The Advantages of an Individual Voluntary Arrangement:
You may only pay back a percentage of your total debt.
You only have to make one affordable monthly payment, or in some cases, a one-off lump sum.
The arrangement is legally binding on all your creditors. They cannot change their minds once it has been approved.
Once the IVA is in place creditors cannot bring any action against you, as long as you maintain your agreed monthly payment.
You are able to operate a 'normal' bank account as long as it does not have an overdraft facility.
You will know from the start what and how long you will be paying
All further interest and charges are frozen.
Some individuals feel an IVA carries less of a stigma than bankruptcy.
Gives creditors the greatest possible return over the period that they would be unlikely to receive using any other agreement.
No publicity in the local papers.
It may safeguard your property or other assets
Your professional or directorial status is usually protected
If your circumstances change then most IVA's can be modified with the consent of the creditors.
The Disadvantages of an Individual Voluntary Arrangement:
IVA is only suitable if you or another person can afford to make an offer of repayment to your creditors.
Your creditors agree to the arrangement by a vote. We will not suggest the IVA as a course of action unless we think there is a good chance that your creditors will accept your offer.
If you do not make the payments to the IVA it is likely that the Arrangement will fail and your creditors will be able to take other action against you. This may result in your bankruptcy.
