If you have unsecured debts over £5000, an IVA is a formal debt solution that people can use.
It’s particularly helpful if you are struggling with unsecured debts and want to avoid being declared bankrupt.
An Insolvency Practitioner (IP) will be appointed to your IVA. An IP will draft up a repayment proposal which outlines your financial situation.
The proposal will be discussed with your creditors at the ‘meeting of creditors’. 75% of your creditors will have to agree to the terms in order to be accepted into an IVA.
During the period of an IVA you will make bitesize repayments over the course of between 5-6 years. At the end of the term any payments that are still owed are written off.
An IVA is a legally binding agreement meaning, your creditors cannot back out of it. Creditors also can’t make any adjustments to the terms after entering the IVA agreement.
With an IVA you know where you stand and the contract is legally binding. Typically repayment lengths range from 5 – 6 years. However, the length of the IVA will depend on the number of creditors owed.
Creditors will no longer be able to contact you regarding missing payments. This includes any bailiff activity, CCJs, attachment of earnings and charging orders.
This is subject to the creditor’s approval, it will mean there is no risk to your home or assets of reasonable value.
The interest on the debts you owe will no longer increase. Interest is frozen at the time you enter an IVA.
As part of the IVA monthly payments fee could be paid to the IP. However, the fees are included within your monthly repayments and will not be hidden to you.
It is important to check with your employer to ensure there is no impact on your employment position. It is sometimes possible for an IVA to have an indirect impact on your occupation.
75% of creditors have to agree to the terms in order to initiate a successful IVA. This process is known as the ‘requisite majority’.
Don’t stress, there are a few options available to you if your IVA is rejected by your creditors.
The first thing to do is look over the terms of the agreement you are proposing.
In a lot of cases, your creditor will tell you straight away if your terms are not suitable for them and they will outline where they need adjusting.
If you are prepared to make these changes, your creditors should then accept your IVA.
However, if you are not prepared to agree to the terms laid out by your creditors there are a few other options.
This is a ‘softer agreement’ between you and your creditors that would be agreed by both parties.
It helps pay off your debts to your creditors the same way an IVA would but would not be legally binding meaning you do not get the protection that an IVA offers.
This is a loan that can be used to pay off all of your creditors at once.
The benefit of doing this is that you would be only dealing with one creditor, not a handful of creditors.
You need to have less than £30,000 worth of debt and be earning less than £75 a month to qualify.
Complete our free solution finder. We’ll understand your circumstance and then create the best solution tailored for you. If we believe you fit the criteria for an IVA you will be alerted by one of our specialists.
Our friendly specialists will have a 5 minute discussion of your situation and run you through your options. This process is 100% free and confidential.
If we believe an IVA is the best solution for you, our specialists can help with an IVA. This will put you on the path to becoming debt free!
Don’t worry, try our free Debt Solution Finder
(These are some hypothetical examples of clients using an IVA)
£11000 In Debt
£14370 in Debt
Previous monthly payment: £510pm
Previous monthly payment: £1100pm
An IVA is a solution for people with over £5000 worth of debt, you must also owe more than one creditor. An IVA is a legally binding agreement which can help write off up to 81% of debts over a 5 or 6 year period. Sometimes more depending on the number of creditors involved.
A Debt Management Plan or DMP, is an informal agreement between you and your creditors to pay back lower priority debts, this will reduce your monthly outgoings to an affordable figure each month.
Bankruptcy is a formal solution designed for those who physically cannot repay debts. Bankruptcy is often viewed as the last resort but can be a good solution for those who cannot make any repayments.