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How to Get an IVA

By October 15, 2019Food for thought

An Individual Voluntary Arrangement (or IVA for short) is a formal agreement drawn up by your creditors to help you manage debts. The usual approach is that your debt management company (DMC) will assign a licensed Insolvency Practitioner to work out the details with your creditors to establish what you can practically afford to cover. Due to this arrangement, you can expect to pay one reduced monthly fee and at the close of this IVA period (typically five or six years) the remaining unsecured debt will be written off. Incredibly, this can represent as much as 85{656fba9076fce85d9375a78485744480d9a16cad220bfa051b3a2faf0d56adbe} of your total debts.

Setting up an IVA is not a decision to be taken lightly though. If your creditors accept the proposal, it will be legally binding – so you should seek expert help and guidance before you make your final decision. The benefits of an IVA are more affordable repayments, the ability to stop creditors hassling you, legal protection from bailiffs, stopping attachment to earnings, the possibility of writing off remaining debts and eventually becoming debt free. During the IVA period your Insolvency Practitioner will review your finances on a yearly basis and provide an annual report.

Your debt management company will calculate the IVA payment by studying your income and expenses (without including any debt repayments) and figuring out how much spare cash you have left over each month. Be warned that while it can be a powerful solution to escape a surging debt load that you couldn’t otherwise settle, an IVA will also negatively impact your chances of taking out any credit in future. In other words, it will leave a negative mark on your credit rating – but fortunately this won’t be permanent.

A record of your IVA will be entered into the public Individual Insolvency Register (IIR) and will remain there until the arrangement is concluded. You should find that you can secure credit for living essentials or for purposes related to the wellbeing of your family; or If you are the owner of a company or are self-employed. However, since your credit rating will be much poorer than usual during the course of the IVA, you will probably find it much more difficult to take out any new credit. If successful, the interest charged is likely to be considerably higher.

If you’re hoping for credit totalling over £500 while the IVA is active, then you will need to seek written permission from the Insolvency Practitioner at your debt management company. The IVA itself will stay on your credit file for six years after the agreement started. Evidently, this is a serious step for under-pressure debtors who are looking for a comprehensive solution. It has worked for many of our clients. If you have any questions about the IVA system or want to further explore its suitability for your personal situation, please get in touch with Debt Support Service by phone: 0800 97 88 495 or email: info@debtsupportservice.co.uk today.