In the UK an IVA is an Individual Voluntary Arrangement and is a formal agreement between you and your Creditors. An IVA is usually appropriate for someone who cannot make their regular monthly repayments but can make a payment after paying their other expenses.
An IVA proposal details how you will repay your Creditors and usually lasts over a period of five to six years. An IVA could also be in the form of a lump sum, money you may have got from your assets or by raising the money elsewhere, for example from a relative.
What happens in an IVA?
An IVA is something that an Insolvency Practitioner sets up on your behalf. Companies such as Payplan and the CCCS can assist with putting you in touch with an Insolvency Practitioner. One thing you should remember is to check how much you will be charged if you opt for an IVA and whether any payment would need to be made upfront. As you are in Debt, you might be struggling as it is and finding more money to cover upfront fees could be difficult.
The company you choose to help you will require quite a lot of financial information from you. All the information requested will relate to your financial situation as well as standard details. Once the company you selected has this information they will calculate how much you will be in a position to repay.
Are the Repayments Affordable?
The amount you will repay will be affordable to you and will take into consideration your financial situation. This amount will then be multiplied by 60 or 72 months. When this calculation has been performed and it is likely you will pay off a reasonable amount of your debt, you are likely to be accepted for the IVA.
When the plans for repayment have been made, an Interim Order may be applied for. An Interim Order will mean that your Creditors are unable to take action against you without first asking the Court. A meeting date will be specified and and full repayment plans will be submitted to all your Creditors. The Creditors will then have the chance to vote on the repayment plans. If 75% of your Creditors (based on the value of their debts against the total debt) agree, the IVA would then become legally binding.
Sticking with the IVA
It is then a case of sticking to the agreed monthly repayment amount for the specified time frame. Provided you complete your arrangement as agreed then the liabilities you have to your Creditors are discharged completely.
An Insolvency Practitioner will conduct regular reviews with you regarding your arrangement to help ensure you are able to complete it successfully.
If you are considering an IVA, ensure that you seek professional advice first. It may help you to speak to the Citizens Advice Bureau or an organisation such as Payplan or StepChange.