If you are looking for an insolvency solution that can help you to reduce the amount you owe and get back on your feet, an IVA is one arrangement which has probably been recommended to you. This solution is available to consumers in England, Wales, and North Ireland.
If you are thinking about taking the next steps, then you are probably wondering how you can go about getting an IVA. Getting a fresh start sounds wonderful, but debt arrangements can be complicated.
Below, we have laid out the basic steps to getting an IVA. These steps will not only get you back on the right track, but will help you to avoid the scammers out there.
1. Fully understand what an IVA is and how it works.
The first step to getting an IVA—or any debt solution—is to make sure that it is the right choice for you. The best way to do that is to research! Learn as much as you can about IVAs—what they are and how they work. Make sure that you qualify for an IVA and that an IVA really is the best fit for your circumstances.
IVA Plan has put together extensive resources for just this purpose. While an insolvency practitioner (IP) would be happy to speak with you and advise you on debt solutions in person, we have compiled these online resources for your convenience. We want you to feel comfortable with an IVA before you move forward.
2. Look for a reputable company with licensed insolvency practitioners.
Following are red flags you should avoid:
- Companies that aggressively try to steer you toward a solution that may not be the right fit.
- Companies that either charge no fee at all for an IVA or a huge fee they require you to pay upfront.
- Any business which operates without transparency (no street address, no company background).
- Companies that “guarantee” your IVA will be accepted.
- Insolvency practitioners who are not licensed.
When you are selecting an IVA company, here is what you should be looking for:
- Companies that employ licensed insolvency practitioners.
- Fair fees. IVA costs may vary, but typical fees range close to £5,000. The best companies will not charge you all this money upfront, but will bundle it into the monthly bill that you pay over the duration of the IVA.
- Businesses which make a fair disclosure of the risks of an IVA, and which give your situation thorough and personal consideration.
There are many legitimate companies which are licensed through the government to offer formal debt arrangements like IVAs. Do your research and read reviews.
3. Contact the company and set up a meeting with your debt adviser.
Your next step is to get in contact with the company that you selected for your IVA. Set up a time and a date to meet with your adviser – this can be done over the phone or in person. At that meeting, you will discuss your situation in-depth and decide whether an IVA really is the best fit.
4. Hunt down all the documents you need.
When you attend your meeting with the insolvency practitioner, you will need to be able to prove every aspect of your financial situation. To that end, you will need to bring documents with you. These include:
- Pay stubs to prove your income.
- Bills or agreements which prove your debts.
- Bills which prove your mortgage, rent, utilities, and insurance costs.
With these documents, it is possible for the adviser to get a comprehensive look at your financial situation and see exactly where you stand regarding what you can afford. This will help the adviser to verify that an IVA really is the best solution, and to come up with a plan.
5. Work with your adviser to come up with a plan.
At this point, you and your adviser will come up with a proposal for your IVA. This proposal will tell creditors how much you can afford to pay each month on each of your debts. If you are willing to sell any assets, you can include them in your proposal (otherwise, you can leave them out).
6. Wait for your adviser to get the IVA approved by your creditors.
After you approve the proposal yourself, the next step is to get your creditors to approve it. Thankfully this is not something you need to worry about doing yourself; your Insolvency Practitioner will take care of it for you. All you need to do is make yourself available over the phone in case your adviser needs to ask you a question.
75% or more of your lenders need to approve the IVA at the meeting for it to go into effect. If the IVA is not approved, some lenders may make a counterproposal.
7. Keep up with your payments and review your situation annually until the IVA is complete.
At this point, you are all set. Your IVA will be active, and your name will be entered into the Insolvency Register. This is a public file anyone can access, but no one will likely find out about your IVA unless you mention it to them.
Your life will be greatly simplified under the IVA. You will no longer need to make separate payments on all of your debts; they will all be consolidated under one monthly bill. You will only pay what you can afford after expenses. The fee for your IVA will be included in this bill. You should not be asked to pay it upfront.
It is important to continue to make your payments on time and in full every month. There will be an annual review with your insolvency practitioner to make sure that you are on track and that nothing in your situation has changed.
If your income goes up or down, you will want to notify your adviser right away and not wait for the annual review. That way if an adjustment needs to be made, it can go into effect immediately. This will prevent problems later down the line.
Own a home? Six months out from the end of your IVA (usually a five-year period), your adviser will review your mortgage with you. If you have significant equity, you may need to remortgage it to release it to your creditors. If you cannot do this, you may need to continue with your IVA payments for 12 more months (depending on circumstances). After six years, your IVA will come to an end, and your remaining eligible debts will be relieved.
While there are a number of steps involved in setting up an IVA, it is quite easy to maintain once it goes into effect. You will find that your finances are much more manageable, and you will finally be able to breathe easy knowing you will not suddenly lose your home or assets. You can get back to taking care of your family and planning for the future.
Still looking for a licensed insolvency practitioner (IP) to get you started? IVA Plan’s advisers have helped numerous consumers in situations like yours to start fresh. Call us at 0203 326 9000 and we can help you take the first steps back to solvency.