What is an IVA?

If you have unsecured debt of over £5,000 and you are struggling to meet repayments, then an IVA could be the best solution for your circumstances.

IVA Explained

An IVA is a legally binding agreement between you and your creditors. You agree an affordable payment plan for a set period of time – usually 5 or 6 years. Your case is set up and administered by a licensed Insolvency Practitioner and interest and charges are frozen. Your circumstances are reviewed annually and after your IVA is concluded any remaining debt will be written off. Your credit file could be affected for 6 years.

You make a monthly payment to the IVA and your Insolvency Practitioner (Supervisor) distributes it to your creditors, This removes the need for you to contact your creditors.

Benefits of an IVA

  • Make one affordable monthly repayment.
  • Get a clear timescale of when your debt will be cleared.
  • Reduce your monthly outgoings based on what you can afford.
  • Will protect your home from creditors if you are a homeowner.
  • Freeze creditor interest and charges.
  • Stop letters and phone calls from your creditors.
  • Stop debt collectors and bailiffs from calling you.

Other Considerations

  • Your details will be recorded on the public insolvency register.
  • You will not be able to get additional credit of more than £500 without your supervisor’s consent.
  • Homeowners will need to look into releasing equity from their home.
  • Failure to comply with the IVA may lead to your bankruptcy.
  • Your credit file may be affected for six years.
  • Certain debts will still be outstanding.

Steps to consider if the IVA is the solution for you

Step 1 – your first call to us

You can either call us or complete the online enquiry form. We will go through a fact find to assess your eligibility for an IVA.

Step 2 – your IVA proposal

If we feel that an IVA may be appropriate for your circumstances, we will send you out an application form and begin drafting your IVA.

Step 3 – meeting of creditors (MOC)

When your proposal has been drafted, it will be sent out to your creditors so that they can consider it. A virtual meeting will then be arranged, where each of your creditors can opt to attend via conference call or to simply submit their votes via post or electronically. These votes will detail  whether to accept your Individual Voluntary Arrangement proposal.

Step 4 – your IVA has been approved

In order for your Individual Voluntary Arrangement to progress 75% of your creditors that vote will need to agree it. If your IVA is accepted, your case will be passed to the supervision department. This is where your IVA will be looked after for you. A dedicated team will then look after you should you have any problems or need to ask questions.

IVA fees explained

Although your Insolvency Practitioner will follow the standard framework, the fees involved with an IVA will vary from case to case.

There are three kinds of fee involved in an IVA:
A nominee’s fee, a supervisor’s fee and disbursement costs. Further details of these can be found in the following link:

 

IVA Fees

IVA example

Example based on a typical client, with approx. £31,000 of unsecured debts who completes a five year IVA and has no equity in any property.

  • *Typical monthly repayments (60 months) £300
  • Total paid (including fees) £18,000
  • Nominee’s fee £2,500
  • Supervisor’s fee £2,700
  • Supervisor’s estimated costs £290
  • Total amount paid to creditors £12,510 (40%)

*The above example is based on the standard presentation of fees. The fees displayed are likely to be further restricted by creditors on approval.

As a formal insolvency procedure, an IVA is a legally binding agreement with your unsecured creditors and requires an insolvency practitioner (known as an IP).

An IP is a qualified professional with the experience to handle insolvency cases. They will be responsible for ensuring your IVA is fair to both you and your creditors all the way through.