An Individual Voluntary Arrangement (IVA) is a formal and legally binding agreement between you and your creditors to pay back all or part of your debts over a period of time at an affordable rate.
Set up and managed by an Insolvency Practitioner (IP),an IVA is a form of insolvency which allows you to write off up to 80% of unsecured debt and offers an alternative to bankruptcy.
An IVA is a legally binding arrangement made between you and your creditors to pay off your debts with a repayment plan that suits your circumstances. Over time,they have emerged as a widely used debt solution in the UK.
Those who are eligible can apply for an IVA to regain financial control,write off a percentage of their debts,and move forward with your financial wellbeing.
At Money Assits,we offer a professional,impartial review of your financial circumstances.
An Individual Voluntary Arrangement (IVA) is a legally binding arrangement made between you and your creditors to pay off your debts with a repayment plan that suits your circumstances.
Since it is a formal and legal debt solution;you,as well as your creditors,are obliged to maintain the agreement. Once you enter into an IVA your creditors are unable to take any further action against you.
During the course of your plan all interest and fees associated with your debts are frozen. At the end of the IVA the remaining debts are written off.
Before applying for any debt solution,(including IVA) in the UK,it is important you discuss your situation to make sure you are aware of all your options.
An IP will begin the process by working out what you can afford to repay and how long the IVA lasts. You’ll have to give details about your financial situation,e.g. your assets,debts,income and creditors.
If an IVA is right for you,you will work out a repayment plan with an IP. Your IP will draft an IVA proposal with you which details your repayment offer,any assets,and all of your unsecured creditors.
Your insolvency practitioner will contact your creditors and your IVA proposal is then presented to creditors in a meeting. The IVA will be approved if the creditors holding 75% of your debts agree to it. It will bind all your creditors,even those who disagreed with it.
An IVA will stop your creditors from taking any form of legal action against you for your debts.
In the UK,only residents of England,Northern Ireland or Wales can apply for an IVA. If you live in Scotland,check out Trust Deeds instead
An IVA would cover most of your unsecured debts. Debts covered by IVA include:
EXAMPLE UNSECURED DEBTS| Debt: £20000 | Creditors: 3 |
| Contractual Payments Each Month £700 | Now Paying Each Month: £922 |
| Monthly Payment Reduced By: | 78% |
| Projected Payments Into a 5 Year IVA: | £900 |
| Estimated Debt Write-Off Upon Completion: | £5000 (55%) |
To set up an IVA,you need to instruct the services of an IP so there are some costs involved. An IP is a licensed professional (usually a lawyer or an accountant).
3. Disbursements
Disbursements usually cover expenses paid to third party companies for software licenses,insurances,or any regulation that is required. They could also include the cost of additional services hired to offer the best returns to creditors.
An IVA usually lasts for five or six years. However,in some cases,it can be extended by another 12 months to give borrowers a chance to repay their debt according to the agreed terms.