What is an IVA?
An IVA is an Individual Voluntary Arrangement. This is a formal agreement made between yourself and the people that you owe money to. The agreement is mutually beneficial and allows yourself to pay back a small percentage of the debt you owe, in return giving your creditors regular monthly payments which can not be easily broken.
Key Benefits of an IVA
- An IVA is often seen as a less severe alternative to bankruptcy
- 100% protection from bailiffs and debt collectors, once your IVA has started
- The interest and charges on your debts will be frozen during the IVA
- Your creditors will not be allowed to call you, text you, email you or post letters to your house
- You will be able to keep your home with an IVA
- Your car is usually unaffected with an IVA
- An IVA will make you completely debt free
- You can apply for an IVA over the phone
- No upfront costs
How does an IVA work and what is an IVA?
It may seem complicated at first, but an IVA is really simple, here is how it works:
- IVA Calculator – Check if you are eligible for an IVA by using our IVA Calculator.
- Credit Check – This is not a typical credit check, it will not affect your score and it won’t be classed as an application. A credit check is run to display a list of all of your debts. Debts which are not displayed on the credit check will need to be added manually.
- Income and Expenditure – An advisor will run through your income and expenditure to get an idea of where you are currently spending your money and to see if you are solvent or insolvent.
- Allowances – Your advisor will look to allocate allowances for your daily spending. This will include budgets for food shopping, entertainment, children’s pocket money, mobile phones, childcare etc. They allocate these budgets towards your future spending, even if you haven’t been able to spend money on these things in the past.
- IVA Proposal – Your Insolvency Practitioner will put together an IVA proposal. The IVA proposal will be a formal agreement sent out to the people you owe money to. Typically, they will look to offer regular monthly payments towards the debt for a period of 5 years. In return, the Insolvency Practitioner will look to achieve a large percentage of the debt written off at the end of the arrangement.
- Acceptance – Once your creditors accept the IVA proposal, you will need to make 60 monthly payments towards your IVA, until it is completed.
- Debt Free – Congratulations! At the end of your IVA, you will now be completely debt free!
I need advice, can you help?
At IVA advice, we work with a network of Insolvency Practitioners who will give you the best IVA advice and help you to understand what is an IVA. This means that you will always get the best advice possible, for free!