Brief Overview of IVAs

Despite being introduced in 1986, there are still many facts surrounding IVAs that are often misconstrued or misunderstood. The following list of quick IVA facts is intended as a general overview of IVAs and is not a substitute for professional advice tailored to suit your own circumstances;

1. IVA stands for Individual Voluntary Arrangement and was a debt solution introduced by the government
2. An IVA must be set up and overseen by a Licensed Insolvency Practitioner, often referred to as an I.P.
3. An IVA is a legally binding agreement on you and your creditors
4. You will be expected to make an agreed monthly payment for 5 years under the terms of an IVA which is used to pay back your creditors
5. IVAs are for unsecured loans such as credit cards, store cards and overdrafts, things like mortgages or car finance agreements can’t be included
6. An IVA will harm your credit rating for its duration and typically for about 12 months after you’ve been discharged from it
7. IVAs are only available in England, Wales & Northern Ireland. In Scotland, the equivalent to an IVA is known as a Protected Trust Deed
8. Successful completion of your IVA will leave you debt free and able to start again
9. Control over what happens to your home stays with you in an IVA, unlike bankruptcy where the court can sell your house to pay off your creditors. During an IVA you may have to release any equity in your home though to pay back your creditors 
10. Failure to keep to the terms of an IVA could result in you being made bankrupt
    

Many people enter into IVAs unaware of the facts and exactly what they’re getting themselves into. Committing to a five year legally binding repayment plan is a big step in anyone’s life and it makes sense to be properly armed with all the facts before making a decision you could live to regret.

An IVA can be a very effective debt solution which leaves you debt free at the end of it. You pay back a monthly amount you can afford once your bills and reasonable living expenses have been deducted. This amount  is decided on by your I.P. and paid to your creditors.

In order for an IVA proposal to be accepted by your creditors, at least 75% by value of them must agree and typically they’ll look for a minimum return of 30p for every £1 you’ve borrowed.

To discuss your suitability for an IVA or learn more about the facts above, call us now on 0800 043 4374.