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Individual Voluntary Arangements

An Individual Voluntary Arrangement, or IVA, is a legal process that allows you to make a formal proposal to your creditors to clear your unsecured debts without resorting to bankruptcy. This should not be confused with the less formal and less conclusive Debt Management Plan

Most IVAs involve one affordable repayment per month, over a period of 60 months (five years). Your monthly repayment will be based on the amount you can afford after your normal cost of living has been deducted from your income and all your assets and liabilities have been taken into account, therefore reducing the risk of your IVA repayments pushing you into arrears and forcing you to miss payments on your mortgage or rent, car finance, utility bills or council tax. Less often, debts can be paid by using a, one-off payment known as a ‘Full and Final Settlement’ or ‘Lump Sum’ Individual Voluntary Arrangement (IVA).

An IVA proposal has to be drafted by a licensed Insolvency Practitioner (IP), which is then approved by you. A copy of the proposal will then be sent to your all of your creditors, and a creditors meeting arranged. The IP will chair the meeting, in which creditors vote on whether to accept or reject your IVA proposal, or to accept it with modifications made with your consent. The voting will often take place by fax or by post, and you will not normally be required to attend the meeting. If more than 75% in debt value terms of the creditors creditors that actually choose to accept the proposal, the IVA is agreed and becomes legally binding for all parties, whether they voted or not.

When you have successfully completed your Individual Voluntary Arrangement (IVA), you will be considered debt free, even if you haven’t repaid all of your debts in full. Any outstanding balances will be written off, leaving you free to make a fresh financial start.