We know that when you are searching for answers to your financial challenges, the last thing you want to worry about is spending more money.
That is why IVA Plan offer free confidential advice to customers who are thinking about applying for an IVA. You are under no obligation if you accept a consultation; there are no strings attached.
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What is an Individual Voluntary Arrangement (IVA)?
An Individual Voluntary Arrangement, or IVA, is one of the most widely recommended debt solutions for consumers in England, Wales, or North Ireland. An IVA can help you solve your debt problem by turning all of your unsecured debts into one affordable monthly payment.
An IVA is essentially an agreement between you and your creditors to settle your debts through a series of monthly payments over a fixed period of time. The amount you pay back, and how long your arrangement lasts, depends on your lifestyle and finances.
An IVA is a formal debt solution, which means it is legally binding both for you and your creditors. Breaking a legally binding agreement comes with financial and legal consequences, so once people enter into an IVA, they have to make sure to keep up with repayments.
How does an IVA work?
How do you set up an IVA?
Individual Voluntary Arrangements are usually arranged on your behalf, either by a debt charity or a private company specialising in debt solutions. They will assign you an Insolvency Practitioner (IP), a debt professional authorised and regulated by the Financial Conduct Authority (FCA) to represent you.
Your IP will work with you to create an IVA proposal based on your debt level and the amount of money you can afford to pay towards your debts. Once you have a proposal, the IP will present it to you creditors. For the plan to go into effect, at least 75% of your creditors need to approve it.
What happens once you enter into an IVA?
If your creditors approve the plan, you will have a chance to pay towards your unsecured debt. You will make monthly payments you can afford after your routine monthly bills are accounted for. You will make these payments for a period of five to six years.
After that time period is complete, your Individual Voluntary Agreement will come to an end and any remaining debts will be written of, leaving you debt free and ready to make a fresh start.
How do you know if you qualify for an IVA?
An IVA can be a positive way to manage your debts, however to be eligible you must meet certain criteria. An IVA may be the best way for you to settle your debts if the following applies to you:
- You have £6,000 or more of unsecured debt
- You owe money to two or more creditors
- You’re a resident of England, Wales, or Northern Ireland
- You have a steady income and consistently be able to make at payment of at least £85 per month
If you do qualify for an IVA you can stop pressure from the people you owe money to, reduce monthly payments, and get free of money worries by writing off up to 90% of unsecured debt.
Is an IVA free?
If you reach out to a debt charity, you may be able to get free services and advice on using an IVA. That might be the best way to make sure it’s right for you. Even with a debt charity, however, you are likely to have to pay some form of fee if you go ahead with an Individual Voluntary Arrangement.
The alternative is to use debt companies to set up voluntary arrangements. These companies are industry experts who specialise in debt solutions like IVAs. The best providers will offer you debt advice and money advice free of charge, though they will take a fee if you begin a formal arrangement.
There are several costs associated with an IVA, from hiring Insolvency Practitioners to maintaining the arrangement. The good news is you will never have to pay an IVA provider for their services up front – fees will be manageable, and will always be taken from your monthly payment.
We have a wide range of debt management solutions that could help you write off up to 81% of your debts.Check if you qualify
Can I do an IVA online?
It is possible to arrange an IVA using a combination of online and over the phone. Every reputable IVA company will have a website where you can log on, look around, click links, and do due diligence on fees and any other important information.
Even if you are happy with the website experience, you will still have to talk with a debt adviser on the phone. They will need your personal information, like your phone number and email address, as well as detailed financial information, from your bank account details to income and expenditure.
Once they have enough financial information, they can draft you an IVA proposal based on your circumstances. Although it’s convenient to apply for an IVA online, you should always make sure you research the company thoroughly before agreeing to anything.
Benefits and risks of an IVA
- You pay only what you can afford after regular expenses. That means you no longer need to debate whether to catch up on your credit card bills or pay for heat or electricity.
- The IVA lasts for a finite, concrete period of five to six years. Once it is over, you are released from most of your remaining debts.
- You have the option of paying a lump sum toward your debts. An IVA is also flexible and may be adjusted to changes in your income (up or down).
- Your creditors can no longer take legal action against you or harass you.
- You can stay in your home.
You may need to remortgage your home. This could result in a situation where you are saddled with a higher interest rate.
- Your credit rating will take a hit (but eventually your credit score will correct again since your situation will be improving).
- Your name and IVA will be recorded in the public Individual Insolvency Register. Depending on what line of work you are in, this could adversely impact your professional standing.
- You will be restricted in terms of taking on new credit or loans (which you probably are anyway).
- If an IVA fails, your creditors may end up back-dating the interest on the money you owe them.
Is an IVA worth it?
Even though there are risks involved with an IVA, in many cases those risks are offset by the long-term benefits. In some situations, they may not be all that relevant. Your credit taking a hit is pretty immaterial if your credit rating is already terrible.
You do need to have some form of regular, reliable income in order to successfully apply for an IVA. If you do not have some form of steady income, bankruptcy may be a more appropriate debt solution.
There are many shady companies out there that charge an arm and a leg just for debt advice. And even if they do not, they may aggressively push an IVA on every customer. Reputable companies will always take you through several debt solutions, and never proceed with an IVA unless it is your best option.
How do I get an IVA approved?
Here at IVA Plan, our goal is not to sell you an IVA; it is to help you find the best debt solution for your circumstances. That may be an IVA, or it may be another solution. If you do decide an IVA is the best for option for you, here are the steps you will go through to apply for an IVA.
Fact finding call
When you give us a call, we will set up a free confidential consultation to discuss your debt problems in-depth. Bring us paperwork which proves your financial situation, including your income, secured loans, and monthly expenses. We will analyse your situation, help you figure out whether an IVA may be right for you, and address any questions or concerns you may have.
Creating an IVA proposal
If an IVA is the right choice for you and you are comfortable pursuing the arrangement, we will take the next steps and help you apply – assigning you an Insolvency Practitioner (IP) to work on your IVA proposal. As mentioned before, IPs are the people who represent you during the arrangement, and they will present your proposal to creditors.
Meeting with your creditors
When the proposal is shared with creditors, we will arrange a meeting with your creditors and allow them to vote on it. If 75% agree, your IVA is approved. If not, you will have the chance to work with the Insolvency Practitioner to make modifications to the debt solution which may make it more palatable to creditors.
Once your IVA is approved, you can begin your journey to a debt free life. As long as you keep up with your monthly payments, you will settle your debts in five or six years – unless you come into a lump sum, in which case you can end the agreement even earlier.
Where can I get more information and IVA advice?
Whether an IVA is the best way for you to settle your debts is ultimately up to you, but at IVA Plan, we can offer you the advice and support you need to come to an informed decision.
Whether you need money advice, have a debt question, or want more information on IVAs – from fees to IPs – at IVA Plan, our expert debt advisers can offer you the support you need.
You could write off up to 81% of your unsecured debt today