IVA - Individual Voluntary Arrangement
The Individual Voluntary Arrangement (IVA) was introduced by the government as part of the Insolvency Act 1986. IVA is a valuable alternative to bankruptcy, allowing you to make a proposal to the people you owe money to (your creditors) and to reach a final, legally binding settlement.
An IVA settlement gives you affordable monthly payments over a period of five years. These payments replace your current payments to lenders and when you have finished these you become debt free.
Because payments are based on what you are realistically able to afford, exact amounts vary. But the monthly amount can start from as low as £150. That is usually significantly less than existing minimum payments on credit cards and loans.
| Advantages of an IVA | |
|---|---|
 |
Affordable monthly payment |
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You won't have to go bankrupt |
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You keep your house and car |
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Interest payments are frozen by law |
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Your overall debt is substantially reduced |
|
Your friends and family don't have to know |
|
Your debts are cleared in five years |
| Disadvantages | |
|---|---|
 |
No more borrowing during the IVA period |
|
Credit rating is poor for a further year after the IVA |
|
|
Default can result in bankruptcy |
|
|
Five year period |
ClearStart can help?
ClearStart is able to help you make the decision as to whether or not an IVA would be the best choice. A dedicated department processes hundreds of IVA applications for individuals every month.
Call us on 0800 988 9345 for quick IVA help
or complete our simple online IVA application form
Will my debt be written off?
As part of an IVA proposal, some of your debt will be written off. You will need to be wary of unrealistic promises: some organisations will tell you they can write off 90% of your debts using an IVA. In fact, a write-off of 50-60% is an average. So if all of your debts add up to a typical £60,000, for example, you can expect to have £25-30,000 written off in total through an IVA.
How to start an IVA?
IVA proposals have to be made to creditors using an IVA advisor such as ClearStart. They must be agreed by at least 75% (by value) of the people you owe money to before they can go ahead. Agreed monthly payments are part of IVA but some proposals also include a lump sum payment, using equity release, for example. The whole IVA setup process can take as little as 4-6 weeks from your application.
How an IVA works?
The IVA process is legally binding and it is simpler than bankruptcy, with a less severe outcome. Most lenders have standard terms for what they will accept in an IVA proposal and ClearStart uses its judgement and experience when working with you to find out what you can afford to pay each month.
During the five-year IVA period, an Insolvency Practitioner manages the fund that you contribute into and uses it both to pay off creditors and to cover IVA fees. You will usually have regular reviews, with payslip reviews each quarter and a full assessment of your circumstances every year.
Remember that after five years of successful IVA payments your debt is cleared, even though creditors have usually received less than everything they are owed.
IVA often suitable when:
- your unsecured debts are at least £15,000 -£20,000
- your monthly payments are at least £150
- you have a stable monthly income.
Further Reading:
IVA Help | How an IVA works | IVA Costs | IVA Criteria | IVA Approval Process | How to Start IVA | What Is an IVA?
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