What is an IVA?

The IVA (Individual Voluntary Arrangement) is a legal agreement that exists between the creditor and the debtor. It is comprised of a proposed payment plan for you to pay off a portion of your debt. During your IVA you will receive no action against you by any of your creditors.

After the conclusion of your IVA your remaining debt is cleared.
The typical span of this debt solution is about five years.

Your application will be set up and supervised by a licensed Insolvency Practitioner, this ensures that your IVA is created and monitored correctly in serving your best interest.

The Purpose of an IVA

An IVA serves as a legal and binding agreement with your creditors for you to pay back your debt; it is most beneficial for those who have a monthly income and do not want to get in bankruptcy.

IVA Payments and Debt Forgiveness

Your payments during your Individual Voluntary Arrangement can be set up by monthly instalments or in some cases they can be paid on larger payments.

When determining what you will be paying within your IVA the creditors along with your Insolvency Practitioner will assess your income and your payments based on what you can spare each month.

At the end of your IVA after the final payment your remaining debt is removed. This can be up to 75% but is typically close to 60% of your total debt.

Breaking down the Process

When you have decided to apply you will need to seek the assistance of an Insolvency Practitioner. With the help of your IP you will draft a proposal for the clearance of your debt.

The Insolvency Practitioner will then go to the courts with your application for an Interim order.
The interim order serves as protection for you against action from creditors while you are attempting to be approved for an IVA. At this time your Insolvency Practitioner will coordinate a meeting with your creditors where your proposal will be discussed and voted on.

During the voting process you must receive a 75% vote in favour of your IVA for it to be approved. If at least 75% of your creditors approve the your application the other 25% are legally bound to agree as well at which time no one will be able to seek action against you.
If however you do not receive 75% of the votes your Individual Voluntary Arrangement will not be approved.

An IVA is a legal contract between you and your creditors and so long as you maintain your end of the deal as stipulate the creditors will not seek any action against you. If at any time during your IVA you run into additional financial difficulties it is important that you contact your Insolvency Practitioner so that appropriate actions can take place. If at any time you default on your agreement your creditors can put you up for bankruptcy.

Your Insolvency Practitioner is responsible for your application and will keep a detailed watch over your progress during the time. Upon the acceptance of an Individual Voluntary Agreement it becomes your sole responsibility to keep up with your scheduled payments. It is your Insolvency Practitioner’s job to make sure that these payments are dispersed correctly.

At the end of your five years your debt is wiped clean even if you did not pay the entire amount leaving you free to start your finances off new.

You should be aware that when dealing with an IVA your home equity would come into play.
If you have acquired a large sum of equity in your home it is feasible that you will have to release a portion of it to your creditors as a form of payment. This may sound harsh and unfair however it is with an IVA that you are guaranteed not to lose your home.

You know what it is… now why should you have apply for an IVA?

One of the greatest reasons to go with an IVA is that it is not sever as a bankruptcy and it keeps you from seeking other debt solution avenues. Some of the reasons to choose are:

  • You will be given and affordable monthly payment based on what you can pay.
  • The time to clear your debt is short and reasonable, only five years, at the end of which your debt is cleared even if the full amount has not been paid.
  • An IVA agreement means no more creditors calling and harassing you.
  • It is a legal contract that cannot be changed after all parties agree to it.

Remember that an IVA is a very specific thing and must be evaluated carefully by an expert. We recommend you seek always for professional advice and impartial help.

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