Ready to break free from the financial debts that are weighing you down? In this article we are exploring an Individual Voluntary Arrangement UK. We’ll discover how IVAs as a debt solution can help lead you back to financial freedom.
Individual Voluntary Arrangement UK Guide: Say Goodbye to Debt
Need help with debt? An Individual Voluntary Arrangement (IVA) could be the right answer. An IVA a legally-binding agreement between you and your creditors in order to pay back your debts over a set period of time. This is typically between (4-5 years) – after the term debts can be written off. An IVA will also freeze interest payments and prevent debt contact, meaning no more annoying calls, letters or bailiffs turning up at your door.
There’s no restriction on what can or cannot be included in an IVA. As long as it’s been set up properly by a qualified insolvency practitioner (IP). Due to the legal nature of an IVA, It’s always important to explore different possibilities before locking yourself into one.
All About Individual Voluntary Arrangement UK
An Individual Voluntary Arrangement UK (IVA) allows you to create an affordable repayment plan.
Enjoy peace of mind knowing that this arrangement is monitored for 5 – 6 years. During this time, all money will go towards repaying those debts until they are cleared free of charge.
If you are unable to pay off all of your debts within the agreement term it is quite common for debts to be written off at the end of the term. This will depend on the terms set out by your Insolvency Practitioner when the agreement is presented to your creditors.
Don’t worry if your personal situation changes, such as increased/decreased income. When it comes to regular reviews, changes can always be made to the agreement. Hence, payments remain manageable and agreed upon throughout the individual voluntary arrangement UK.
Within an IVA your basic necessities are always protected, you will be provided with enough cash each month to pay for things like rent, food and certain utility bills.
Is IVA right for me?
To qualify for an IVA your debts must be above £6000 and your must owe more than one creditor. Unfortunately, certain types of debt, such as student loans or fines, can’t be a part of it.
A licensed insolvency practitioner must set up an IVA, they will be able to look at your particular situation and decide whether an IVA is right for you. Fees usually total around £5,000 though most practitioners will include these fees in the agreement.
Other solutions do exist, Debt Relief Orders, Debt Management Plans and bankruptcy could be viable routes for those needing support with the regeneration of their finances. Each one has their own set of pros and cons, talk to free independent advisors who can help you find what’s best for you by using our free solution finder.
Repayment Plan
An IVA is a great way to tackle unmanageable debt. You’ll work out an arrangement with an insolvency practitioner that best fits your budget. For the agreement to be set and active your creditors have to agree on it.
This will happen at what is known as the ‘meeting of creditors’. At this meeting your IP will present your terms to your creditors. 75% of your creditors will have to accept the terms in order for the individual voluntary arrangement UK to be accepted.
Usually lasting 5-6 years, you pay back what you can afford until all debts are settled. Any outstanding amount will only need to be paid by the end if there are enough funds for repayment.
The practitioner reviews your situation annually throughout the period. So, if things improve financially, like getting a raise at work, more money will go towards repaying those dues.
When you’re in an IVA you must:
– Meet the agreed payments (either monthly payments or one lump sum).
– Any increases in income must be disclosed to your IVA provider.
– Any new credit or loans must be accepted by the IVA provider before application.
What debts are included in an IVA?
IVA is a great option, but some payments won’t be included. This includes:
Secured debts or loans
Hire purchase debts or limited company debts
Child maintenance arrears
Student loan bills
Court fines
TV licence fees.
Before you set up an IVA, it’s essential to try and pay these off. With your IP you should arrange how they’ll continue getting managed outside the plan as they cannot be forgotten.
Pros and Cons of IVA
Pros:
- Set up controlled payments to manage finances.
- Stop snowballing debts and interest charges.
- Avoid legal action against you.
- Creditors will receive some repayment.
- Debt write-off after successful completion.
Cons:
- Credit rating is affected, and you may need help to get new credit during the term.
- There may be fees charged by providers involved in the process of an IVA.
- Non-payment of monthly repayments could result in the termination of the IVA arrangement.
Dealing with joint debts
If you and your partner want to pay off your debts together, we do suggest you look into interlocking IVAs!
This flexible repayment option allows couples to get back control of their finances. You can have a chat with an insolvency practitioner about making it happen.
Conclusion
Are you struggling with your finances? An Individual Voluntary Arrangement UK can be a great way to get back on track. However, an IVA is not for everyone, like all debt solutions we recommend talking to a professional advisor to run you through the options applicable to your financial situation. Taking steps towards financial security doesn’t have to feel daunting, there are people out there that can help. You can start by trying our free debt solution finder.
