IVA

An Individual Voluntary Arrangement or IVA is a legally binding contract between a debtor and their creditors, supervised by a Licensed Insolvency Practitioner. The purpose of the IVA is to enable you to reach a compromise with the creditors and avoid the consequences of bankruptcy. It is less restrictive than bankruptcy but is governed by similar legislation, thus providing the comfort of legal protection and the knowledge that the process is handled by a qualified Insolvency Practitioner who acts as a Supervisor during the term of the IVA.

Advantages of a IVA

• Interest and charges are frozen.

• Monthly payment is based on what you can afford.

• Debt free in 5 years.

• You will pay no direct fees. The Insolvency Practitioner will collect his fees from your contributions to the creditor.

• No more creditor contact throughout the term of the arrangement. • Avoid all of the unfavourable stigma and restrictions of bankruptcy.

• Legal action and collection action will stop. • Compels you to address your financial management issues.

• Removal of the temptation to get further into debt.

Disadvantages of a IVA

• Require a minimum debt level of £15,000.

• In order for the IVA to be agreed, you require approval to the value of 75% of the unsecured creditors .

• Your home and assets may still be at risk if the creditors decide not to exclude them.

• You may find getting credit in the future more expensive. Creditors will assess your risk level based on your financial history.

• You will not be able to use your store or credit cards. These will be cut up.

• You will normally not be allowed to borrow any more money until you have successfully completed your arrangement. It may however be possible to change an existing mortgage or take a new one while you are in an IVA .

• If the IVA fails as a consequence of you not meeting your obligations, it is likely that you will be made bankrupt.

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