When you ask the question 'what is an IVA?' the answer is an 'Individual Voluntary Arrangement' which is an option to ease personal debt problems. An IVA is similar to a debt management plan but more highly regulated and supervised by a qualified Insolvency Practitioner.
An IVA is an arrangement whereby an Insolvency Practitioner will negotiate with your creditors on your behalf in order to reduce your monthly payments on unsecured debt such as personal loans, credit cards etc. to a more manageable level. An IVA seeks to protect a family home should this be owned by the debtor.
It will take into account essentials such as mortgage or rent, food, household bills, allowances for motor expenses etc. and calculate your monthly disposable income from this information.
An IVA would generally run for a period of 5 years (60 months) at which time, any outstanding balance within the IVA would be legally written off. However, there are circumstances where an IVA maybe extended for a further period. This could be due to the fact a house has increased in value and there is sufficient equity to raise additional funds towards your debts. Funds could be raised against the property to make a full and final settlement or failing that an extension to the term maybe required.
Unsecured debts in a typical IVA maybe in the region of £12,000 or more. You would need to earn a salary and / or have surplus monthly household income in order to make contributions to the IVA.
However, there are circumstances where an IVA is suitable with unsecured debt as low as £7,000. Whatever your circumstances please contact us for advice.
Creditors will vote on an IVA proposal and 75% of votes (in value) at your creditors meeting must be in favour of it. Creditors can suggest modifications to your proposal and you can choose whether to accept them or not.
A fixed monthly payment will be agreed and this must be kept to throughout the term of the IVA. However, should your circumstances change (for better or for worse), there is provision within an IVA to amend the terms and monthly contribution and also to apply for a payment break due to unforeseen circumstances such as redundancy.
Contributions are divided between your creditors and disbursements made to them by your Insolvency Practitioner. Fees for arranging and supervising an IVA are taken from your monthly contributions so your payment or indebtedness would not increase due to any relevant fees.
X-debt provides genuinely independent debt advice, free and without obligation. We review all your finances with you, confidentially, in order to establish your financial situation. Only then would we recommend an IVA or inform you whether it is appropriate. The final decision lies with you. In the first instance you can try our IVA calculator or call us on 0800 043 2424 or 0161 787 3400.