What Is an IVA?
An Individual Voluntary Arrangement (IVA) is a formal debt solution, similar to a Trust Deed, for people in England and Wales which can allow you to condense multiple unaffordable repayments into one single reduced monthly sum.
An IVA is a fixed-term agreement, meaning that if all of the newly reduced repayments are met, then any remaining debt at the end of the agreed period (usually five years) is written off. Any additional fees and interest are frozen throughout this period – all debts included in the IVA cannot rise any further than the original amount.
Once we have everything set up, the solution becomes legally binding. This means we can protect you from creditor harassment. They are not allowed to try and make direct contact with you, meaning all letters and phone calls must go through us, and they are prohibited from taking legal action against you.
Are You Eligible for an IVA?
To be eligible for an IVA you must live in either England or Wales (a Trust Deed is the Scottish equivalent). Technically you can apply with any amount of debt, but your creditors are unlikely to commit to the agreement if you owe less than £10,000 in total. You must also owe this money to two or more creditors. Lastly, you must have a steady income which, after we work out a budget, leaves you with around £100 of disposable income which we can distribute between your creditors
Most types of debt can be included, although in the case of secured debts, such as a mortgage, this requires your creditor’s permission which they are unlikely to give.
An arrangement would usually include things like:
- Bank/building society loans or overdrafts
- Credit Cards
- Personal Loans
- Utility Bills
- HMRC Debts
- Council Tax/Rent Arrears
How Is an IVA Set Up?
The process of setting up a protected Trust Deed with us is a sequence of simple, manageable steps.
Step 1: After you get in contact with us we will have a look at your finances and get an idea of the situation you are in. Our team of advisers will determine what you can realistically pay each month, while still leaving you with enough money to cover your essential expenditures.
Advice from us is free and impartial. There is zero-obligation to take any further steps towards an IVA following consultation, and no fees apply.
Step 2: At this stage, we will take your proposal and seek approval of every creditor included. We do not need every creditor to vote in order for it to be approved, but of those that do vote 75% must accept the proposal.
Creditors may also suggest changes to the proposal, which you do not need to accept. We can delay the proposal by up to two weeks so that you can consider the suggestions.
Step 3: Your proposal should now be accepted by your creditors. Regarding those who rejected it, as long as 75% accepted they are still legally bound by the agreement.
Every year we will be in touch to review your situation. Depending on your circumstance, your monthly repayments may go up or down.
Step 4: After five or six years, depending on the agreement we came to with your creditors, assuming all of your payments have been met in full all remaining debt will be wiped off.
At this point, creditors cannot contact you or take legal action against you in an attempt to reclaim any money they were originally owed. You can now enjoy your debt free life!
Advantages of an IVA
- There is no initial cost for setting up the arrangement.
- Approval from all creditors included in the agreement is not required, only 75% of them. Those who do not vote, or vote against it, are nonetheless bound to the agreement.
- After everything has been set up, all additional charges and interest on the debt are frozen.
- Multiple payments to different creditors are combined into one, reduced payment.
- Creditors cannot contact you once the IVA has been established; they can only legally contact us.
- A huge amount of debt can be written off.
- We do all of the heavy lifting, like preparing your proposal and working out your budget.
- Your home can always be protected; you will not be forced to sell it.
If anything still isn’t clear then give one of our helpful on-hand team of advisers a call today. We’re happy to work out if you’re eligible, and if not prepare other suggestions for you. Join thousands of people across the UK in taking the journey towards a debt free life with us!