What is an IVA?
What is an IVA?
An IVA or Individual Voluntary Arrangement is an alternative debt solution to bankruptcy.
An IVA provides you with a way of working with your creditors - to provide a mutually beneficial solution so you can reach a final, legally binding settlement.
An IVA replaces all your current debt repayments with one affordable monthly payment, which is paid over a period of five years. After that time, any remaining debt is written off therefore making you debt free, which will be such a relief.
IVA monthly repayments can start from as low as £150, which is usually much less than your existing minimum payments on unsecured debt such as credit cards and loans.
An IVA may be the option for you if you have unsecured debts of at least £15,000, live in England, Wales or Northern Ireland- and have around £200 of disposable income per month.
For more information on IVA's and debt solutions, please contact ClearStart for free, impartial and immediate advice. We're here to help you make the right debt management decisions.
How long does an IVA last?
An IVA usually lasts for five years but can be completed more quickly in some cases, especially where it is possible to produce a partial lump sum.
Who can an IVA help?
Anyone in England, Wales or Northern Ireland with debts over £15,000 and a stable income could potentially benefit from an IVA. For residents of Scotland, ClearStart can recommend a practitioner who can set up the Scottish equivalent (a Standard Trust Deed).
How much does an IVA cost?
IVA repayments vary on a case-by-case basis, depending on what assets a debtor has and how much money is available after living expenses have been deducted from monthly income. There tends to be a minimum amount that creditors will accept and an IVA is usually rejected if it offers to pay the creditors less than 20-25% of what they were originally owed.
What happens when an IVA is finished?
At the end of the IVA process the Supervisor will give you a "Statement of Completion", normally within three months of the final payment. A copy of this will also be sent to the Insolvency Service for their records.
What happens if I default on IVA payments?
If you don't adhere to the terms of your IVA because you default on your payments, the Supervisor will be required to bring the IVA to an end. This means that your creditors will be able to commence collection action once again. of the IVA can start bankruptcy proceedings against you.
What are the advantages of an IVA over bankruptcy?<
Setting up an IVA does not have the same stigma or disqualifications as bankruptcy. It is a private agreement with your creditors and does not get publicised. There are no professional disqualifications and you retain your right to hold public office. Bankruptcy proceedings are also more costly for both debtor and creditor than setting up an IVA.
Can I set up an IVA if a bankruptcy order has been made against me?
If the bankruptcy hearing has not taken place yet this is possible: the Insolvency Practitioner may have to issue an Interim Order to halt proceedings while an IVA proposal is put together. If the Bankruptcy Order has already been issued it is still possible to propose an IVA but an attractive proposal is more difficult to achieve because bankruptcy costs must also be taken into account.
How do I set up an IVA?
ClearStart maintains a helpline that can tell you everything you need to know. If you decide to apply for an IVA, ClearStart can also prepare all of the necessary documentation for you to approve before contacting creditors and getting your IVA proposal underway.
Will I have to sell my house if I set up an IVA?
Unlike with bankruptcy, an IVA does not force you to sell your home. However you might be asked to release some of the equity in your property to pay your creditors.
Will my creditors agree to an IVA?
For your IVA to be accepted, 75% of your creditors (by debt value) have to vote in favour of it. Some things make a creditor more likely to accept an IVA proposal. For instance, you should never propose to repay less than 25% of the total debt.
If I set up an IVA will anyone interfere with the running of my business?
As long as you stick to the terms of your IVA, you can carry on running your business under your sole control and without any outside interference.
Does an IVA affect my credit rating?
While the IVA is in place you are not allowed to take out any further unsecured credit such as credit cards, store cards, personal loans, etc. A note goes on your credit file alerting potential lenders and this note remains on your credit file for a total period of six years (usually one year longer than the duration of the IVA). Many lenders will therefore choose either to lend at a high interest rate or not at all for a year after your IVA finishes. There are some lenders who specialise in mortgages or secured loans for people with previous credit problems and ClearStart is able to help with this.
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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