Individual Voluntary Arrangements (IVAs)

What is an IVA?

An IVA could help you become debt free in 5 years as well as giving you legal protection from further interest and charges being added to your debts.

An Individual voluntary arrangement (IVA) enables you to avoid bankruptcy by making a formal agreement with creditors to pay off a percentage of your debts over a fixed period.

An IVA often appeals to debtors who wish to avoid bankruptcy and its associated penalties. It also gives the debtor more control over how assets are dealt with and increased peace of mind that no further debts will accrue.

Who should consider an IVA?

IVAs may be appropriate for anyone with a regular income who has perhaps overborrowed or overcommitted and is seeking an alternative to bankruptcy.

Typically, an IVA agreement will see a creditor agree to write off a proportion of the debt owed to them. In return the debtor agrees to pay a fixed proportion of their monthly income towards the debt for a period of five years.

How Broker House propose your IVA

To start with, you will require the services of the our licensed Insolvency Practitioners to propose your IVA.

Here's how the process works:

Stage 1

Our Licensed Practitioner will assess your financial situation to see whether you are eligible to enter into this type of agreement. The Licensed Practitioner will need to "nominate" you for the IVA (this is simply part of the process and means they feel an IVA is an appropriate debt solution for you).

Stage 2

The Licensed Practitioner will then draw up your 'proposals', based on the information you provide. They are your proposals and they allow you to put forward the best offer of repayment you can afford. The offer could be a lump sum amount or regular contributions, usually over a 60 month (5 year) period.

Stage 3

A copy of your proposals will be sent to each of your creditors: they are invited to vote to either accept or reject the proposals. If a majority of your creditors (eg, more than 75% of the creditors by value) vote in favour, then the IVA is approved and will be legally binding for all creditors (even those who may have refrained from voting or those who rejected the proposal).

Stage 4

Once your IVA is approved, you simply start to make the agreed payments or pay the lump sum into the arrangement and all calls and letters from your creditors must cease.

Stage 5

Once the agreed payments have been completed the remainder of the debt will be cleared.

You could be debt free in 5 years - speak to us in confidence for free and impartial debt advice tailored to your situation.

Seeing both sides - the advantages and disadvantages of an IVA

Advantages:

All interest and charges on your unsecured debts will be frozen.
Providing you keep to the terms of your arrangement, you will be protected from any further court action by your creditors. They will also be prohibited from sending letters or telephoning you.
Once the individual voluntary arrangement has been successfully completed, your debts are effectively written off, providing you with a fresh start.
If you do not wish to consider bankruptcy or cannot go bankrupt because of their job, this can be an excellent option.
All unsecured creditors will be bound by the IVA.
Your contributions are based on your ability to pay.
Individual Voluntary Arrangements are not published in local newspapers, unlike bankruptcy.
It will not affect professions such as the Police Force and Armed Forces, neither will it impact on your ability to hold public office or act as a company director.

Disadvantages:

You will be required to stick to a budget for the term of the arrangement (usually five years).
All assets and liabilities must be declared: if you own assets of excessive value, the creditors can ask that they be released for the benefit of the creditors.
You will be asked to release some of the equity from your property towards the last six months of the arrangement.
Any windfalls, inheritance or bonuses must be declared to the Supervisor of the arrangement.
All Individual Voluntary Arrangements are recorded on a public register and are likely to appear on your credit file.

Seeking an IVA is just one way of dealing with financial issues and may represent a viable solution to your debt problems.