What Is An IVA?
An IVA (or Individual Voluntary Agreement) is a legally binding agreement between you and your creditors to pay back what you can afford through a single monthly payment. Once an IVA has been set up and approved, your creditors will stop chasing you for payment – as long as you keep making your arranged payments.
You’re not likely to have to pay back all of your debt – whatever’s left unpaid at the end of the IVA (usually after 5 years) will be written off. You will find it almost impossible to get credit during that time and for another year afterwards while the IVA is on your credit file. After that, it should slowly become easier to get accepted for credit.
75% of your creditors have to agree to your IVA for the application to be successful – if more than a quarter of them don’t agree to it, it won’t get approved. If you’re in a situation where you’re considering an IVA, the chances are that your creditors will be happy to approve it as it means they are guaranteed to get a portion (or sometimes all) of their money back.
Our trusted debt management partners will manage the setting up an IVA for you, so use our free debt solution tool and take the first step towards getting your finances under control today.
Am I Eligible for an IVA?
The only way to know this for sure is to have a chat with a professional about your individual circumstances. Usually, if you have at least 2 lines of debt (number of creditors), and the debt is at least £3,000, then our non-judgemental team could help you find out if you could qualify and if it suits you.
Even if you don”t think you qualify, it may be that your debt balance is larger than you think or you may have other debts that you can include that you had not thought of or have forgotten about. This can be established once you’ve completed our contact form and spoken to a professional. Complete our simple form to find out if you are eligible for an IVA or call us.
How much debt will you have to pay back with an IVA?
This all really depends on your individual circumstances. Your Insolvency Practitioner (who will propose and supervise your IVA) will look at all your finances and work out exactly how much you can afford to pay back each month.
They’ll organise it so that each of your creditors gets a portion of the money you pay each month.
Once your IVA is finished (usually after 5 years) any outstanding debt you have will be written off and you can make a fresh start with your finances.
It might seem odd that your creditors would agree to you starting an IVA because they know they are only going to get a portion of the money you owe them back. Creditors usually agree to an IVA as they would prefer to recover at least some of what you owe, rather than risk recovering nothing which may happen in bankruptcy.
It’s important to know that if you don’t keep up with the repayments that are designed to suit your needs; your creditors can force you into bankruptcy through the courts in an attempt to recover as much of your debt as possible.
Summary of an IVA
An Individual Voluntary Arrangement (IVA) can be a great form of assistance for the right person. If you qualify, it allows you to create a legally binding agreement with your creditors to repay your debt with a monthly payment that you can afford.
If you have creditors requesting monthly debt repayments that aren’t affordable, you may qualify for an IVA.The IVA will usually last 5 years. This means you could be debt free in 60 months by repaying some or all of your debts back with the help of an IVA.
In order to help you get debt free quicker than you might otherwise be able to, your living costs will be taken into account and a licensed professional called an Insolvency Practioner (IP) will assess your case.
All unsecured debts are included into an IVA.
An IVA helps prevent people from having to go bankrupt.