Managing debt can feel overwhelming, but there are solutions designed to help. An
Individual Voluntary Arrangement (IVA) is one such option, offering UK residents a formal
way to manage their debts while working towards financial freedom. If you’re struggling to
keep up with repayments, an IVA might be the solution you need. This guide explains
everything you need to know, from how IVAs work to their benefits and eligibility
requirements.
What is an IVA?
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and
your creditors. It allows you to repay a portion of your debt over a fixed period, typically five
or six years. Once the IVA term is complete, any remaining unsecured debts covered by the
arrangement are written off, giving you a fresh start.
IVAs are approved by the court and managed by an insolvency practitioner (IP), who acts as a
mediator between you and your creditors. They ensure the arrangement is fair and
manageable for you while satisfying the creditors’ interests.
How Does an IVA Work?
Step 1: Assess Your Financial Situation
The first step is to review your income, expenses, and outstanding debts. This helps
determine whether an IVA is the most suitable solution for your circumstances.
Step 2: Create a Proposal
An insolvency practitioner will help draft an IVA proposal tailored to your financial situation.
This document outlines how much you can afford to repay each month and includes a
repayment plan for creditors.
Step 3: Creditors’ Meeting
Your creditors will review the proposal. For the IVA to be approved, creditors representing at
least 75% of your debt must agree to the terms. Once approved, the IVA becomes legally
binding on all parties.
Step 4: Repayments Begin
You’ll make affordable monthly payments to the insolvency practitioner, who will distribute
the funds to your creditors. Payments are usually fixed, making it easier to budget.
Step 5: Debt Clearance
At the end of the IVA term, any remaining unsecured debt included in the arrangement is
written off. You’re no longer legally required to pay these debts, offering a clean financial
slate.
Who is Eligible for an IVA?
An IVA isn’t suitable for everyone. To qualify, you’ll typically need to meet these criteria:
Debt Level: You should have at least £5,000 in unsecured debts, such as credit cards,
personal loans, or overdrafts.
Income: A regular income is essential, as you need to make monthly repayments.
Creditors: You must owe money to at least two different creditors.
Commitment: You need to be willing to stick to the repayment plan for the entire
term.
If you’re unsure whether you qualify, our team can assess your situation and recommend the
best course of action.
What Are the Benefits of an IVA?
An IVA offers several advantages that can help you regain financial stability:
- Debt Write-Off: At the end of the arrangement, any remaining debt is cleared.
- Fixed Monthly Payments: Your payments are based on what you can afford, making
them manageable. - Protection from Creditors: Once an IVA is approved, creditors cannot take legal
action against you or add additional charges to your debts. - Avoid Bankruptcy: An IVA allows you to manage your debts without resorting to
bankruptcy, which can have more severe consequences. - Peace of Mind: You’ll have a clear repayment plan and professional support
throughout the process.
Considerations Before Applying for an IVA
While IVAs are helpful, they’re not the right choice for everyone. Here are some points to
consider:
Impact on Credit Score: An IVA will appear on your credit report for six years,
affecting your ability to obtain credit.
Home Ownership: If you own a property, you may need to release equity to
contribute to the arrangement.
Not All Debts Included: Certain debts, such as student loans, child maintenance, and
court fines, cannot be included in an IVA.
How We Can Help
As a private company specialising in debt solutions, we are here to guide you every step of
the way. Our experienced team will:
Assess your financial situation to determine whether an IVA is suitable.
Help you create a proposal that works for you and satisfies your creditors.
Provide ongoing support throughout the IVA process.
We understand that managing debt can be stressful, but you don’t have to face it alone. With
our expertise, we can help you take control of your finances and work towards a debt-free
future.
Take the First Step Today
If you think an IVA might be right for you, get in touch with our team for a consultation.
Together, we’ll explore your options and find the best solution for your financial situation.
Contact us today to begin your journey toward financial freedom.