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What is an IVA?
An Individual Voluntary Arrangement (or IVA as it is commonly known), is a formal payment arrangement with your creditors. This means it is legally binding on both you and your lenders.
An IVA is a form of insolvency which is administered by an Insolvency Practitioner who will charge a fee for their service.
An IVA will typically last for 5 years (60 months) but may be extended for an additional 12 months if you’re a homeowner, alternatively, you may have to release equity from your home. Your creditors will vote to either approve or reject an IVA and you would need at least 75% of the creditors, by value, to vote in favour for the IVA to be approved.
Debt Support Service can give FCA regulated debt advice and although we don’t administer IVA’s, should this be the right option for you, we can refer you to one of our trusted partners who are able to provide this service.
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Watch our Video below on IVAs
| Benefits | Considerations |
|---|---|
| .One affordable monthly payment. | .You will be listed on the insolvency register until 3 months after your IVA is completed. |
| .Interest and charges are frozen once the IVA has been approved. | .You will have to adhere to some restrictions for the duration of the IVA. |
| .You can include most debts in an IVA. | .You cannot apply for further credit above £500, without the consent of your IVA supervisor. |
| .Creditors cannot take further action to recover the debt once the IVA has been approved. | .Your credit rating may be affected. |
| .Any outstanding debts included in the IVA are written off once completed, provided you adhere to its terms. | .If your IVA were to fail, you could be made Bankrupt. |
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How to apply for an IVA
Applying for an IVA is very straightforward with the Debt Support Service. You can contact our advisers either by giving us a call, via email, or using the live chat feature on our website. Our experts will then advise you as to your suitability for an IVA. Once it’s been established that you are suitable for an IVA, our advisers will connect you to an Insolvency practitioner who will initiate your IVA, firstly by confirming that you meet all eligible criteria. Your insolvency practitioner will take necessary procedures to ensure that your creditors cease contacting you . A brief outline regarding your financial situation, how you plan to pay your creditors, and over what duration, will be drafted by your insolvency practitioner and proposed to your creditors, subject to their approval. It is then up to your creditors to decide to agree to the proposal, before an IVA can begin. It is important to state that only a minimum of 75% of your creditors need to agree to the proposal for it to be initiated. Once this threshold has been met the IVA can begin and you’ll start to make your monthly payments to the insolvency practitioner, who in turn will distribute the money between your creditors.
Not everyone can qualify for an IVA and in some cases it could impact your job, however most are not.
You can call one of our advisers on 0800 97 88 495 or email info@debtsupportservice.co.uk to find out if you qualify for an IVA.
Frequently Asked Questions
What is the eligibility criteria for applying for an IVA?
- You need to have a debt of £5000 or greater.
- You need to owe money to more than one creditor.
- You need to prove that you have a fixed income
- You need to be able to pay a minimum of £80 per month to service your debts
Can I be refused an IVA?
If 75% or more creditors refuse to comply with the proposal put forth by your Insolvency practitioner, an IVA will be rejected. However, your IP can still redraft the terms and conditions of the proposal and resubmit the for further consideration by your creditors.
How might an IVA affect your life?
An IVA could potentially affect your future income or assets that you receive. If you have any new money coming in, or if you receive money (from the sale of a house for example), or if your debt has increased, you’ll need to declare these changes in circumstance to your insolvency practitioner, who will in turn alter the terms of your repayment.
Does my employer need to know about an IVA I have?
You need not inform your employer if you have an IVA, unless you are working for accountancy, law or financial services. However it is always advisable to check with your company HR about where you stand with an IVA.
What to do if you wish to opt out of an IVA?
To opt out of an IVA you’ll need to inform your insolvency practitioner first and request to cancel the IVA. You also need the approval of your creditors, and demonstrate to them that you can pay off your debts without an IVA in place.
Can I close my IVA early?
If for example you receive a cash lump sum, then in such a case you can use it to clear off your debts in one payment. You will need to inform your insolvency practitioner about this and establish wether the amount is acceptable with your creditors.
Is saving possible whilst an IVA is in place?
Yes, you can still save whilst you have an IVA in place. You can deposit savings from your monthly expenses budget for the purpose of meeting unexpected expenses.
How much debt could an IVA write-off?
There is no fixed amount that an IVA can write-off. This will depend on how much you have been able to pay during its term. At the end of the term whatever is remaining can be written off. So basically, the more that you’ve paid towards your monthly payments, the lower the amount there will be left to be written-off.
What constitutes as a breach to an IVA?
Failure to make a monthly repayment would be deemed as a breach, along with these situations;
- Failure to sell an asset you have agreed to sell
- Not repaying an amount that fully represents any additional income received
- Not repaying any money you received from the sale of any of your assets
- Borrowing more than the stipulated amount from friends or family
- Not informing the insolvency practitioner about any change in financial circumstances
What is the cost of an IVA and are there any associated fees?
There are two types of fees associated with an IVA:
Nominee fee – This fee is used for helping you to draft a proposal to put before your creditors. This fee is usually taken from the first five payments into your IVA, or £2000.
Supervisor fee – This fee is usually taken to cover the ongoing costs of the IVA. It is taken from your monthly contributions after the nominee fee has been paid.
These fees are deducted from your payments at the beginning of your IVA, so know exactly where you stand on the amount that you owe.
