IVA – Debt Help

Use our quick and easy enquiry form to find out if you qualify for an IVA

The IVA is a common legal route for anyone to take who has an unsecured debt over £15,000 that they cannot afford to pay.

The advantages of an IVA are:

• You are means tested to see how much you can afford to repay each month so no more living beyond your means to make repayments.
• You have 60 months to pay back your debt and then you are released from the IVA as well as being debt-free. The rest of your debt will be written off.
• You will not be hassled anymore by debt companies, while your debt is being looked after by an IVA.
• This also means that extra fees will not be added to each of your debts.
• An IVA is not the same as being bankrupt, you can have your bank accounts and you can still run a business.
• No debt collection agency can take legal action against you as long as you maintain your repayments.
• You can reduce your debt by as much as 70%

Introduced in the mid 1980s, IVAs have become very popular amongst those with high levels of unsecured debt. An IVA stands for Individual Voluntary Arrangement, and this is a binding contract made between the borrower and his or her creditors with regards to repayment of a debt.

When they were introduced IVAs were seen as an effective alternative to bankruptcy, providing those in debt with a means of making more affordable repayments, reducing debt levels, and protecting assets. With consumer debt levels and bad debt at sky high levels in the UK, these IVAs have become increasingly popular amongst those looking for a solution to their debt problems.

There are a number of considerations to bear in mind if you are thinking about opting for an IVA. Firstly, there are many IVA ’specialists’ crawling out of the woodwork in the UK, but many of them are more concerned about making a profit rather than having the consumer’s best interests at heart – fee charging agencies can make thousands from each IVA they set up.

Therefore, it is best to go through a fee-free agency or charitable group to find out more about setting up an IVA. Secondly, do consider the long term implications of an IVA, such as the effect that it may have on your credit rating and financial future.

There are also certain conditions attached to taking out an IVA. Firstly, you must have collective unsecured debts of fifteen thousand pounds or more. You or your partner (if applicable) must also be in full time employment.

Also, remember that in order for an IVA to be set up successfully there must a majority vote in favour of the arrangement from your creditors otherwise another option will have to be considered – with an increasing number of consumers opting for IVAs, more and more creditors are rejecting applications for these arrangements.

If your creditors do vote in favour of an IVA you will be put on a payment plan where you will pay an affordable, set amount every month, usually for a period of five years. This amount is distributed between your creditors based upon how much you owe each one. After five years any remaining balances are written off, and your debts are considered clear.

Your repayments will then cease. Under an IVA assets such as your home are protected. Creditors cannot contact you and try and get money off you once this arrangement has gone ahead (an interim order is normally put in place whilst the IVA is being set up to stop them from doing this in the early stages as well). Also, interest and charges on your loans will be frozen once the IVA is set up.