What is an IVA?
An IVA is an individual voluntary arrangement. This is a legally binding, formal agreement between you and your creditors (these are the people who you owe money to). It is to allow you to repay debts over the course of a specific time, this is usually 5 years. Therefore, this means that your agreement is approved by the law so you and your creditors have to stick to it.
As mentioned above, an IVA typically lasts around 5 years. Following this, if the plan is successfully completed then your remaining balance in your IVA is written off. Whereas, if you cannot complete the plan successfully and miss your payment to your IVA or your creditors, your plan will fail. Therefore keeping up with payments is essential, just like anything else. Within the plan, you will agree to multiple requirements including regular payments to an insolvency practitioner. As long as 75% of creditors give their approval to the insolvency practitioners proposal, the IVA will go-ahead.
How do they work and how do I get an IVA?
After reading this information, it may give you a better insight into individual voluntary arrangements. So, if you believe that an IVA is suitable for you and will benefit you then you will need to know how you get one.
An IVA is created by a knowledgeable insolvency practitioner. Their role is to help you along the way by working out how much money you will need to pay, how long it will last and also how often your payments will be. Typically, the insolvency practitioner will take it into their control to sort out the money and ensure that it is going to your creditors. So, in simple terms, an IP will create a plan for you and you will need to stick to exactly what it entails until your plan has completely finished. Although, there are consequences to negative actions within the process which you will need to understand before moving forward.
Can any debts be included in an IVA?
Unfortunately, the answer is no. If your loan is secured to an asset this could be a house or a car, you cannot include them in and an IVA. But, if your debts are unsecured the likelihood of you being able to include them is high. Some of the most common types include:
- Debts to family and friends
- Personal loans
- Payday loans
- Short term loans
- Credit cards
- Income tax
The other end of the scale includes those which cannot be used in an IVA, listed below are some examples:
- Secured loans
- Student loans
- Court fines
Do I qualify for one?
Following this link will present you with a series of questions that we need to understand before moving into the process.
The advantages and disadvantages of an IVA
Additionally, when trying to set up an IVA you need to understand not only the advantages but also the disadvantages so you get a wider understanding.
- Monthly payments with a fixed end date
- Debt wrote off
- Private process
- Changes to your credit score
- The monthly payment amount may vary
- Creditors must approve
With this in mind, if you need any more information on an IVA or any other debt support, our website is full of helpful resources to help you find what you need.
Categorised in: General
This post was written by Charlotte K