What is an IVA?
An Individual Voluntary Arrangement (IVA) is a debt solution for people struggling with creditors and living in England and Wales. It is similar to a Trust Deed, and allows you to combine numerous debts to various creditors into one reduced monthly repayment.
As a formal fixed-term arrangement all remaining debt at the end of the repayment process, assuming all payments have been met, is totally written off. This will usually take about five years. Any additional interest charges and fees that would normally apply throughout this period are frozen.
If you are eligible for an IVA, we can set everything set up for you. Once the process has begun it becomes legally binding, which will bring an end to creditor harassment. It is illegal for them to try and make direct contact with you and cannot take legal action against you. You can finally start to answer the phone and pick up the mail without feeling anxious.
Are you eligible for an IVA?
To qualify for a Trust Deed you have to live in England or Wales (in Scotland, a Trust Deed is a very close equivalent). There is technically no minimum amount of debt in order to be eligible for an IVA, although is the total is less than £10,000 it would be unusual for your creditors to accept the agreement. Finally, you must have a stable income. From this we will work out a budget for you which, when accounting for your expenses, must leave around £100 for us to distribute between creditors.
Most types of unsecured debts can be included in an IVA. When it comes to secured debts, they can be included, but will require permission from your creditor. It is unlikely they will agree.
A typical arrangement generally includes debts like the following:
- Credit Cars
- HMRC Debts
- Personal Loans
- Bank/building society loans or overdrafts
- Council Tax/Rent Arrears
- Utility Bills
How is an IVA set up?
The way in which an IVA is set up is fairly quick and very simple.
Step 1: Once you have made contact with our team of trusted advisers, they will analyse your financial circumstances. They will work out how much you can pay each month that will both satisfy your creditors while leaving enough to cover your monthly expenses.
Seeking guidance from is totally free, and anything our team tells you will be entirely impartial. You are never under any obligation to take things any further following consultation and no hidden charges will apply.
Step 2: Once you have agreed to the terms of the proposal, we will present it to your creditors for their approval. If more than 25% of your creditors reject the proposal it will fail.
Creditors also have the right to request changes to the proposal. You do not need to accept these, and we can delay the process by up to two weeks to give you time to think them over.
Step 3: All going well, your creditors will have accepted the arrangement at this stage. If the creditors who rejected the proposal did not reach the 25% needed, they are legally-bound to the arrangement just like everyone else.
You will receive a yearly review from us. Depending on your circumstances, as in whether they have improved or deteriorated, your monthly repayment rate may go up or down.
Step 4: At the end of your arrangement, which might be five or six years, all of your wipes will have been written off. You just have to have met all your predetermined payments.
Creditors have to accept this. They cannot attempt to get any more money from you. It is illegal, and they can take no court action against you.
Advantages of an IVA
- The initial set up cost for an IVA is 0.
- Massive amounts of your debt can be written off entirely.
- All of the boring and complicated administrative is up to us, we just need some information from you to work out your budget.
- All interest fees and additional charges that would normally apply to your debts will be frozen.
- The mess of numerous payments to lots of different creditors will be converted into a singular reduced payment.
- After your IVA has been set up your creditors can no longer contact you. They must go through us instead.
- You will never be forced to sell your home. An IVA is a great way to protect it.
- You don’t need every creditor to agree to the proposal, you only need three in four. Even those who disagree will be included in the agreement in that case.
If you are struggling with debt and would like some of the various solutions we offer explained to you, then give our fantastic team a call today. We can easily work out what you’re eligible for, and answer any questions you might have. Join the 6000 people that we help every year in wiping out your debt!
Call us on 0800 808 5124 for more information.