How to Start Your Journey to Financial Freedom with an IVA
If you’re overwhelmed by debt and seeking a way to regain control of your finances, an Individual Voluntary Arrangement (IVA) could be the solution you need. An IVA is a formal agreement between you and your creditors to pay back a portion of your unsecured debts over a set period, typically five to six years, after which any remaining eligible debt is written off. This option is especially helpful for UK citizens struggling with significant debt and seeking an alternative to bankruptcy.
In this blog, we’ll walk you through how to start your journey to financial freedom with an IVA, detailing the steps involved and how working with an Insolvency Practitioner can guide you every step of the way.
Step 1: Understand What an IVA Is and How It Works
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors to repay a portion of your unsecured debts over a fixed period. The agreement is arranged by an Insolvency Practitioner, a licensed professional who manages the process.
Here’s how it works:
- Debt Assessment: You provide an honest overview of your financial situation, including your income, expenditure, and the total amount of debt.
- Proposal Creation: The Insolvency Practitioner creates a proposal to submit to your creditors. This outlines how much you can afford to pay each month and over what period.
- Creditors’ Approval: The proposal is sent to your creditors, and they must agree to the terms. If at least 75% of your creditors (by value) agree, the IVA is approved.
- Monthly Payments: Once approved, you make regular monthly payments to your Insolvency Practitioner, who then distributes the funds to your creditors.
An IVA can help you avoid the drastic measures associated with bankruptcy and offers protection from creditor actions, such as harassing phone calls, letters, or legal proceedings.
Step 2: Check Your Eligibility for an IVA
To qualify for an IVA, you must meet the following criteria:
- You have unsecured debt of at least £6,000.
- You owe money to two or more creditors.
- You have a regular income and can afford monthly payments of at least £70.
- You live in England, Wales, or Northern Ireland (IVAs are not available in Scotland, where alternatives like Trust Deeds are available).
An Insolvency Practitioner can assess your situation and confirm whether an IVA is the best solution for you.
Step 3: Choose the Right Insolvency Practitioner
Choosing the right Insolvency Practitioner is a crucial step in the IVA process. The Insolvency Practitioner will act as a mediator between you and your creditors, ensuring that the IVA proposal is fair and feasible. They will help:
- Draft and submit your IVA proposal to creditors.
- Negotiate with creditors for the best possible terms.
- Ensure that your IVA runs smoothly, providing ongoing support if your financial circumstances change during the term.
At Apply for IVA, our team of experienced Insolvency Practitioners is ready to guide you through the entire process. We’ll help you create a manageable repayment plan and ensure that your IVA gives you the best chance of financial recovery.
Step 4: Submit Your IVA Proposal and Wait for Approval
Once your proposal is ready, it will be submitted to your creditors for approval. If 75% of your creditors agree, the IVA will be accepted, and you’ll begin making your monthly payments. It’s important to keep communication open with your Insolvency Practitioner throughout this process, especially if you experience any changes in your financial situation.
Step 5: Make Regular Payments and Complete Your IVA
Once the IVA is in place, your creditors can no longer take legal action against you. Your Insolvency Practitioner will ensure that your payments are distributed accordingly. After completing your IVA successfully, any remaining eligible debt will be written off, offering you a fresh financial start.
How We Can Help
Starting your journey to financial freedom with an IVA may feel daunting, but with the right guidance, it can be the first step toward a debt-free future. At Apply for IVA, we specialize in helping UK citizens regain control of their finances through effective IVA solutions. Our team of experienced Insolvency Practitioners is here to support you every step of the way.
If you’re ready to take control of your financial future, contact us today for a free consultation and take the first step towards becoming debt-free.
