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Individual Voluntary Arrangements
An Individual Voluntary Arrangement or IVA as they are commonly known is a government run scheme that helps people out of serious debt problems. It is a legal process that provides people with protection from their creditors by agreeing to a legally binding payment arrangement at a level that is affordable to them. An IVA could be an ideal alternative to taking out another unsecured loan or secured loan against your home.
- Ideally aimed at people with unsecured debts in excess of £15,000.
- Be debt free within 5 years or less.
- Avoid the consequences of bankruptcy.
- Potentially write off a large amount of your overall debt.
- An alternative to a debt management plan.
How does it work?
When entering in to an IVA the process will be overseen by a licensed insolvency practitioner. It is the responsibility of the practitioner to assess the clients ability to pay their creditors and ascertain how much they can comfortably afford to repay each month, bearing in mind their total income and outgoings. The insolvency practitioner would then approach all the creditors with the proposal, at this meeting the creditors will decide to accept or reject the suggest payments.
An IVA would usually run for up to five years, after which time the remaining debts will be written off.
The Process
- Initially the client would provide details of their income and outgoings and details of all their debts.
- The IVA proposal will then be drafted and the client will provide agreement with this.
- A copy will be lodged with the court and sent to all the creditors.
- The whole process is dealt with by the insolvency practitioner on behalf of the client.
- All the creditors will then attend a meeting and vote in favour or against the proposal. They may decide to do this via post rather than actually attending a meeting.
- To be accepted, at least 75% of the creditors must agree to it
- If sufficient votes are accepted then the agreement is legally binding, even if the creditor voted against it.
- The insolvency practitioner will then arrange to collect the monthly payments from the client and distribute this amongst the creditors in accordance with the IVA.
- At the end of an agreed period of up to five years, the payments will cease and the client will no longer owe any outstanding balance.
The Benefits
- Be debt free in less than 5 years.
- It could be possible to write off up to 75% of your debts in some cases.
- The creditors are unable to add any additional interest or charges.
- Gain court protection from your creditors.
- An alternative to debt management plans, where interest and charges may still be applied. A debt management plan may also take longer to repay your debts.
Discuss Further
If you would like to discuss an individual voluntary arrangement further and speak to a skilled debt management adviser then please contact 08445 888 930.