Individual Voluntary Arrangement
What is an Individual Voluntary Arrangement?
An IVA, or Individual Voluntary Arrangement, is a legally binding voluntary arrangement specifically designed to assist people with serious debt problems in England, Wales and Northern Ireland.
An IVA forms part of the Insolvency Act 1986, and offers people an alternative debt solution to bankruptcy.
An IVA generally has a fixed term of 5 years during which time the applicant makes repayments to their creditors.
The IVA repayments are set to an affordable level, established before the IVA begins, and continue throughout the agreed term.
When the agreed term has been completed the IVA applicant is considered debt free, even though they may have only repaid a small part of their original debt.
At the successful completion of the IVA the remainder of the debt is legally written off and the IVA applicant is considered completely debt free.
Other IVA Pros include:
- Creditors must cease any legal action.
- Creditors must freeze interest charges.
- Creditors must stop telephone calls to client
- Creditors cannot charge late payment charges.
- Unlike bankruptcy an IVA is not published in the press.
- An IVA protects property which would be vulnerable in bankruptcy.
IVA Cons include:
- An IVA will damage your credit rating.
- No loans whilst your IVA is running
- Annual reviews to check your repayments cant rise.
- Fixed term and rigid budget.
There are several qualifying criteria required before an IVA becomes a viable option, they are:
- Total debt must be at least £12,000.
- There must be at least 3 creditors.
- The applicant must be able to afford the minimum repayment for his debt level.
For further information about entering into an IVA please call an adviser on 0800 088 7502
