What is an IVA?

Debts can make you feel overwhelmed not to mention the fact that there are consequences of not paying off your debts such as court action, bailiff action, eviction for rent or mortgage arrears. If you are struggling to make your repayments, then you may need to choose an effective debt solution that will help you become debt free as quickly as possible. An independent debt adviser can advise on the best possible debt solution depending on your financial status and what you can afford to pay. One of the most common debt solutions for individuals with a debt problem is an IVA plan, which is basically an agreement with your creditors to pay off your debts over an agreed period of time.

What Is An IVA?

An Individual Voluntary Arrangement (IVA) is a form of insolvency set up by a qualified person known as an Insolvency Practitioner and constitutes a contractual agreement with your creditors to repay all or part of your unsecured debts over a set period of time. This debt solution is formal and legally binding which means that your creditors must stick to it. An IVA is a flexible debt solution that helps you gain more control over your assets. How long an IVA lasts will depend on your financial situation and how much you can afford to repay each month. Your insolvency practitioner who in most cases is an accountant or lawyer will help you work out what you can be able to repay based on your income, assets, debts and creditors.

An IVA stops your creditors from taking any action against you, with the aim of getting their money back. But, before requesting an Insolvency Practitioner to act for you, it is important to know how much the entire process will cost. There are usually two fees that you will be required to pay which include a setup fee and a handling fee each time you repay your debt. One of the major benefits of an IVA is that your insolvency practitioner with deal with your creditors on your behalf throughout the entire duration of the IVA so you will not have to deal with them yourself.

IVA Repayment Plan

Once you decide to get an IVA, your Insolvency Practitioner will work out a repayment plan that best suits you and if your creditors agree to it, you will be required to make an affordable monthly repayment directly to the insolvency practitioner for a period of up to five years. The insolvency practitioner or IP then distributes this money to your creditors. If all your debts are not cleared in full by the end of the IVA, the rest will be written off. An IVA is an extremely flexible debt solution but before you decide whether this arrangement is right for you, there are a few factors that you need to keep in mind.

One of these is that an IVA may affect your job especially if you are a solicitor or accountant. Getting an IVA also means that your savings including your personal pension repayments will be used to repay your debts. In some cases, you may also have to remortgage your home if you own one. Sometimes your financial circumstances may change thus you may struggle to make your monthly IVA repayments. Your creditors may not accept less and if this happens, the IVA arrangement may fail and your creditors may file a petition to make you bankrupt. The insolvency practitioner can cancel your IVA if you do not keep up your monthly repayments. It is also important to note that not everyone qualifies for an IVA so you will need to consult with your debt adviser to know your eligibility for this type of debt solution.

An IVA can last for a period of five or six years and after this period, you will no longer be required to repay your creditors for debts included in the IVA. Your insolvency practitioner will also issue you with a completion certificate’ plus your IVA record will also be expunged from the insolvency register. An IVA can help you pay back many common debts that include overdrafts, personal loans, council tax arrears, mortgage shortfalls, credit and store cards, hire purchase debts and much more.

Flexible debt solutions works as an intermediary. If you are looking to apply for an IVA through our site, we will assess your credentials and pass you onto a debt specialist suited to your needs – who will pay us a fee on introduction.