IVA

An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors where you will come to an agreement to make condensed payments towards the total amount of your debt in order to pay off a percentage of what you ower. After this, generally after 5 years (approx) your debt is classed as settled. This solution is perfect for those who have assets such as properties in positive equity or high-end vehicles to protect.

Once a decision has been made that an Individual Voluntary Arrangement (IVA) is right for you, you will be asked questions regarding your current financial situation. Based on the information you have given, a repayment amount will be agreed upon. Once proposals have been drawn up, you will need to check and sign these and return them to your IP.

An application may then be made to the court for an Interim Order. Once this is in place, no creditors will be able to take legal action against you. A creditor meeting will be arranged to which you should attend, but it is not compulsory.

For an Individual Voluntary Arrangement (IVA) to be approved, creditors will be called upon to vote either for or against the arrangement. If only one creditor votes "for" the IVA, then it will be approved. However, if only one creditor votes against the IVA and they represent less than 25% of your total debt, the meeting will be suspended for a later date and other creditors who did not vote will be called upon for their vote

The IVA will be legally binding. As long as you keep the repayments, when the term of your agreement is finished, you will be free from these debts regardless of how much has been paid off.

During the period of your arrangement your financial situation will be reviewed regularly to see if there has been any change in your circumstances. It is very important that consumers do not confuse and Individual Voluntary Arrangement (IVA) with a Debt Management plan, which are not legally binding.

It is worth noting that if you enter into an IVA with your creditors and you have an endownment policy linked to your mortgage then you may be expected to cash it in and pay the proceeds into the arrangement. Likewise, if your property has a reasonable amount of equity then it is likely that some of it will have to be released at sometime during the arrangement (usually towards the end), so it can be paid to creditors.