IVA Q’s & A’s

Q. What is an Individual Voluntary Arrangement (IVA)?

A. An IVA (Individual Voluntary Arrangement) is a debt solution that allows you to repay the portion of your debt that is affordable usually over a period of 60 months (five years).

Q. Should I enter into an Individual Voluntary Arrangement?

A. There is a strict criteria set for those looking to enter into an Individual Voluntary Arrangement. As a general rule of the thumb, if you:

  • have three or more unsecured creditors a total of £15,000 or more, and
  • you can’t afford to repay your debt within a reasonable period of time, but
  • you can commit to making regular reduced payments for the duration of the agreement,

then an IVA may be a good option.

We cannot advise you on whether and IVA would be the best thing for you to do but we will run over your situation and advise on how it may or may not benefit you.

Q.  How much will have to pay while on an IVA?

A. An advisor will run over your situation and complete an income and expenditure form. This will determine what you will be able to afford on a monthly basis for the term of your IVA.

Q. Will all of my creditors have to agree before my IVA can go ahead?

A. No. A request to each of your creditors will be made for them to vote for or against your proposal. You would need creditors holding 75% of the debt to vote in favour.

Q. Can an IVA write off all of my debts?

A. This really does depend on the nature of your debts. If you have a debt or debts that cannot be placed into the IVA, this debt will have to be maintained outside the IVA but will be placed into your financial statement as a monthly essential making sure that there are funds available to pay for both the IVA and debt(s) outside the IVA.

The following creditors  can be included:-
  • Overdrafts on bank accounts can be included in an IVA
  • Hire purchase shortfall payments on products no longer needed
  • Shortfall payments on services contracts no longer needed i.e. Mobile Phones
  • Money owed to Finance companies
  • Credit card debts
  • Shortfall payments on repossessed properties.
  • Disconnected mobile phone bill.
  • Money owed on store card debts
  • Amounts outstanding on charge cards
  • HM Revenue and Customs VAT
  • HM Revenue and Customs PAYE
  • HM Revenue and Customs Self Assessment Tax
  • HM Revenue and Customs National Insurance NI
  • Loans from friends and family
The following debts cannot be included in an IVA:-
  • Secured debts, such as a vehicle HP or Mortgage arrears.
  • Debts such as Rent
  • Council Tax arrears
  • Fines for such as parking offences
Q. What happens if my financial circumstances  change during the IVA?

A. It is usually written into the IVA proposal that the Individual Voluntary Arrangement will fail if you miss more than 2 payments over the duration of the Individual Voluntary Arrangement but this is usually only enforced when there is a refusal to pay.

If your financial situation was to change and you needed to reduce your payments for a short period of time, your Insolvency Practitioner may be able to facilitate this for you. It is essential that you contact your Insolvency Practitioner as soon as possible as missing payments to the Individual Voluntary Arrangement could lead to bankruptcy.

Q. Will my property be at risk?

A. Creditors generally do not force the sale of property but you may be expected to release equity by attempting to remortgage in the fourth year.

Q. What happens when my IVA ends?

A. When the Individual Voluntary Arrangement comes to an end, your outstanding debt will be written off and you will be legally debt free. Your credit rating will still be affected during the IVA and for a further year when it finishes and this will be reflected on your credit file.