Find out more about Individual Voluntary Arrangements and whether they could be the debt solution to get you on the journey to financial freedom.
Individual Voluntary Arrangement (IVA)
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between an individual and their creditors. It is a solution that allows a person to only repay a percentage of their unsecured debt to their creditors in affordable monthly payments, usually over a fixed term of five or six years. An IVA can also be proposed with a lump sum instead of monthly payments. Once your IVA is approved by your creditors, interest and charges will be frozen and no further action can be taken by the creditors in relation to your debt, When the IVA is completed, you will receive a certificate of completion, and the remaining debt is written off.
An IVA is a formal debt solution. It is a statutory contract set up by an Insolvency Practitioner between you and your creditors. Debt Movement can do this for you if you meet our criteria. If you do not meet our criteria but still want to pursue an IVA, we can put you in touch with another trusted Insolvency Practitioner to help you. This means that you can finally relax in the knowledge that, as long as you make your single, affordable, monthly repayment, your creditors cannot contact you or take action again you for your outstanding debt.
What Debts can I include in an IVA?
Whilst an IVA does deal with the majority of unsecured debt, it’s important to understand that not all debts can be included in an IVA.
Which Debts Can be Included in an IVA?
- Catalogue debt
- Personal loans
- Credit cards
- Gas and electric arrears
- Council-tax arrears
- Water arrears
- Payday loans
- Store cards
- Income tax and National Insurance arrears
- Tax credit or benefit overpayment determined before the IVA
- Debt to family and friends
- Hire purchase and mortgage shortfalls after the sale of the asset
- Rent arrears when you have left the property
Which Debts Can’t Be included in an IVA?
- Mortgages and secured loans
- Hire-purchase and agreements
- Court fines
- TV-license arrears
- Student loans
- Child-support arrears
- Social-fund loans
- Rent arrears (if still living in the property)
Who Can Apply for an IVA?
An IVA is available to all residents of England, Wales and Northern Ireland who qualify. Applying for an IVA is a straightforward process. The first step is to contact us for free today or request a callback. We will take a look at your current level of debt, your income and expenditure and your monthly surplus. If we agree that an IVA is a suitable debt solution for you, then we will draft a proposal to send to your creditors for the settlement of your outstanding debts. Your creditors will review the proposal and decide whether or not to agree to the IVA.
Considering an IVA?
If you’re considering an IVA, it’s always worth taking into account the pros and cons of this kind of debt-management solution. Our friendly, non-judgemental guides can help you make the right decision for you.
What Are the Advantages of an IVA?
- An IVA will stop further interest rates and charges from being added to your debt.
- Here at Debt Movement, your IVA will be supervised by a licensed Insolvency Practitioner.
- An IVA is a legally binding contract, and all creditors must adhere to its terms. It awards you legal protection against any further creditor action.
- The number of monthly repayments is fixed. Usually at 60 or 72 payments.
- Your payment level will be determined by what you can afford, taking into consideration your income and reasonable living expenses.
What Are the Disadvantages of an IVA?
- The default registered at the start of your IVA will stay on your credit file for six years after approval, so your credit rating can be affected.
- You may be required to release equity from your property. (see further information below)
- Only unsecured debts included with the IVA may be discharged at the end of the period, any unsecured debts not included remain outstanding.
- Your IVA will be listed on the Individual Insolvency Register.
- If your IVA fails, creditors can request the Supervisor to petition for your bankruptcy.
- You need 75% of voting creditors to approve. We will negotiate with creditors on your behalf if they reject your proposals.
Why Choose an IVA with Debt Movement?
We have helped over 35,000 people just like you get on the road to financial freedom. Our friendly, impartial guides will help you to decide whether an IVA is the right solution for you. Get in touch today, and if it’s the right solution for you, we can help you apply for your IVA and begin your journey to becoming financially free.
Are you a Homeowner Considering an IVA?
Here are some points to consider if you own your home and are considering applying for an IVA as a debt solution.
- Under the terms of your IVA, if you are a homeowner and have equity in your property, you may be required to re-mortgage six months before the end of the arrangement and pay the money released from the re-mortgage into your IVA.
- If you have equity of less than £5,000, you would not be required to re-mortgage.
- If you do have equity over £5,000 and can’t remortgage, you may need to make extra monthly payments into your IVA, extending the term by 12 months. Otherwise, you could get a third party to provide a lump sum payment if you are able to.
Some Final Points to Consider Before you Apply for an IVA
- At the start of an IVA, an assessment of your income and expenditure is completed and once your IVA has been approved, this is reviewed annually. You will need to restrict your spending so that it remains within guidelines agreed by creditors.
- Debt Movement will help prepare your proposal to creditors based on the information you provide us.
- Debt Movement’s Insolvency Practitioner will act as a Nominee before the IVA is approved and once approved they will become the IVA Supervisor.
- Acceptance of the IVA lies with the creditors. For an IVA to be accepted, 75% of the voting creditors by debt value must approve, therefore, any single creditor with 25% or more of the overall debt level must not reject.
- There may be other suitable options for dealing with your debts, and where this is the case, Debt Movement will make you aware of them. If an IVA is not an appropriate solution for you, we will signpost you to the Money Helper (formerly Money Advice Service) for guidance.
- An annual financial review of your income and expenditure will take place following each anniversary of the approval of your IVA until completion. This will determine whether you can afford to increase your monthly contributions.
- Increases in your living expenses and changes in circumstances are taken into account during this review.
- There will be no upfront fees charged. The Nominee’s fees and Supervisor’s fees are paid from your agreed monthly contribution. If you become able to repay your debts in full, the amount you would pay would include these fees.