Individual Voluntary Arrangement IVA

What is an IVA?  First off, IVA stands for Individual Voluntary Arrangement and the name is simple enough to figure out that you "willing make a feasible plan to repay your creditors".  This plan of repayment is a formal and legally binding agreement between you and your creditors for 5 years, which will reduce the amount you owe and give you 5 years to do it.  With the current economic crisis in the UK, IVAs have been a sort of security option for many. 

If an IVA is the right debt solution for you, you should contact an insolvency practitioner.  They will review your financial position and determine a feasible repayment plan.

The UK government introduced IVAs in 1986 to stop individual in financial trouble from losing their homes, while allowing creditors to collect a portion of the money you owe them. Since the introduction of IVAs over 40,000 IVAs have been issued each quarter.

What should you expect from an IVA?

• Be realistic! an IVA can clear large portions of your debt, however your creditors must agree to the IVA terms
• Your insolvency practitioner should be impartial
• Your first aim should be getting your finances back on track as quickly as possible
• Equity from your home is required and will be contributed towards your debt
• Your credit rating will be affected

What are the Pros to an IVA?

• You will be required to pay a fix amount for up to five years in one IVA payment verses multiple payments to multiple creditors - therefore, getting yourself on a budget and managing your money can provide a light at the end of the tunnel
• At the end of the five year period your debts will be discharged and you can began to rebuild your credit
• While you are under an IVA, creditors can not harass you. No more collection calls, letters, and knocks to your door
• IVA is not a bankruptcy -- You will not lose your home
• A portion of your debt can be written off

What are the Cons to an IVA?

• You can not miss an IVA payment.  If you miss an IVA payment you can still go bankrupt
• During the first year of an IVA, the amount paid usually goes to the insolvency practitioner.  Therefore, if you miss a payment prior to the first year -- you have not cleared any of your debt
• You will not allowed to apply for credit cards or loans until the completion of your IVA.  Even after the completion of your IVA you may find it hard to find a lender
• If you receive a windfall, it must be reported to your insolvency practitioner and may be required towards your debt.  A windfall can be an inheritance, work bonus, lottery win etc.
• Some types of saving account may be required as payment towards your debt
• IVA should be consider if your debts amount to 15,000 or more and you have three or more creditors