The IVA procedure was introduced in 1986 under The Insolvency Act and is a legal procedure where the person in debt pays back a percentage of what is owed in full and final settlement. The IVA is a well respected and widely used debt solution.
Why use an Individual Voluntary Arrangement (IVA)?
- A legally binding way to deal with the debts you have as long as the IVA is accepted by 75% of the creditors (by value) then the interest and charges will be frozen
- Whilst an IVA is legally binding and creditors are refrained from contacting the debtor regarding payment of the debt they may still contact the debtor in cases of promotional material and/or certain other circumstances.
- Do not be misled into thinking that any debt repayment solution is a simple low-risk process.
- If the IVA is accepted by 75% of the creditors (by value) then the interest and charges will be frozen
- A way to reduce your monthly repayments
- An IVA is not advertised in the local newspapers. However an IVA it is listed publicly on the Individual Insolvency Register or in the case of a protected trust deed, it is listed publicly on the Register of Insolvencies.
- After an IVA is completed you are debt free. However the effect on credit rating is likely to remain on file for 6 years.
- An IVA acts as a safeguard to losing your home. Please note that with an IVA (in the fourth year) the supervisor may require the debtor, if they are a homeowner, to revalue their home and realise the equity to pay off some or all of the debt.
- A person subject to an IVA can continue to have a bank account. Please note the person will not be allowed an overdraft facility or other credit facilities though.
- An IVA usually lasts for up to 5-6 years. It is not quick solution.
- In most cases of an IVA creditors will be prepared to write off no more than 70% of a debt and in some cases 60%.
- Please note only unsecured debts included within the IVA may be written off at the end of the period and that those not included such as secured debts, Government fines and child support payments will remain.
Useful resources:
The UK Insolvency Helpline
Address: The UK Insolvency Helpline, National Administration Centre, Room 4, Gable House, 239 Regents Park Road, London, N3 3LF
Contact By:
Freephone: 0800 074 6918
Website: http://www.insolvencyhelpline.co.uk
Area Served: England, Scotland. Ireland and Wales
Opening/Appointment Times: Open 24 hours all year round including bank holidays
Areas of Work: The UK Insolvency Helpline is a national telephone helpline for people with debt problems in England, Scotland, Ireland and Wales. The service is confidential and non-judgemental. The service provides self-help advice to its callers and also produces written self-help packs and fact sheets to back this up. The service can also assist callers with the setting up of Debt Management Plans and other insolvency arrangements. |
