An Individual Voluntary Arrangement (IVA) is a formal, legally binding debt agreement that freezes interest and charges on your unsecured debts. It is a debt relief option suitable for people who cannot repay their debts in full, within a reasonable time, or meet their monthly payments. The process is set up by a professional called an Insolvency Practitioner (IP).
The IVA process begins with a thorough review of your financial situation and the creditors you owe money to. Your IP will work with you to come up with a proposal that is likely to be accepted by your creditors.
Once you have submitted your application, the IP will contact your creditors to make them aware of the IVA and explain how it works. This can be done by telephone, video conference or in person.
Your IP will also ask you for details of all your assets, including property, cars and any savings you have. If you own a house, the IP will look at the amount of equity you have and whether this would be enough to repay all of your outstanding mortgage and secured loans.
If you own a car, your IP will also take into account the value of any other vehicle you may own, such as a van or motorbike. This is because some lenders will have a legal right to deduct the value of these items from your bank account as part of your IVA repayments.
You can usually apply for an IVA if you owe more than a certain amount of money and you can’t afford to pay off your debts in full. Some types of debt can’t be included in an IVA, however, such as student loans and certain kinds of housing debts.
It’s important to remember that your IP will want to ensure you can still make your monthly payments while your IVA is in place, so they will be careful to try and find a solution that allows you to keep your home without losing it. This could mean selling any possessions you don’t need and re-mortgaging your home.
During the process, you must pay your IVA on time and keep your IP updated with any changes in your circumstances. These could include income increases, changes in employment status, forgetting debts or windfalls like inheritances.
A good IP will be able to explain everything to you in simple terms, helping you understand what is involved and how long the process takes. They will also be able to offer advice and support throughout the process.
When you have decided on the best solution for your situation, you’ll need to submit a detailed IVA proposal. This will include a report from your IP that tells you how likely the proposed solution is to be agreed to by your creditors.
Your IP will then speak to all of your creditors and organise a meeting. At this meeting, each creditor is given a vote on the proposal. If at least 75% of the creditors agree to the proposal, your IVA will be approved.
How To Apply For An IVAAn iva is a formal debt arrangement set up by a professional called an Insolvency Practitioner (IP). They will work with you to explore your current financial situation, your debt level and how much money you can afford to pay towards a monthly repayment plan.
They will then make a proposal to your creditors that will allow you to repay a portion of your debts over a period of time through a series of payments. If you can keep up with these payments, all unsecured debts included in the arrangement will be written off at the end of the term.
You may be able to get access to business credit if you need it, but this depends on the specifics of your case. This can be pre-agreed with the trade creditors included in your proposal, and subject to agreed criteria and parameters.
If you have property, an IP will work out your share of the equity in it to check if this is enough to fully repay your debts. This will depend on your circumstances and may require the sale of some assets to raise funds.
A debt solution like an iva can make it harder to get credit, so your chances of getting a loan, mortgage or bank account will be reduced. Your credit report will also be affected and your credit rating will be lowered.
To avoid the problems of an iva, it is important to seek expert advice. Whether that’s from a debt charity or a trusted debt relief company, they will provide you with information about the different solutions available and help you decide which one is best for you.