IVA for dummy - The IVA explained in really simple terms

Many individuals have problems paying their debts; there are other options instead Bankruptcy. One of those is called Individual Voluntary Arrangements or IVA. What this means is that you make a legal binding agreement with your Creditors to pay back your debt with monthly payments.

An IVA is supervised by a licensed Insolvency Practitioner, who will help you to reach an agreement with your Creditors. In most situations an IVA is a much softer solutions than Bankruptcy.
With Bankruptcy you can lose everything you own including your property but with an IVA you agree to pay what you can each month in order to clear all of your debts.

IVA basic Requirements

  1. You must owe at least £15,000 of unsecured debt, Credit Cards, Car loan, overdraft etc.
  2. You must have at least 3 Creditors in the UK.
  3. You need a stable income.
  4. Your Creditor must approve your application.

An IVA will only be recommended if you can meet all the requirements stated above. Many IVAs fail because these specific requirements cannot be meet.

If you apply for an IVA without knowing its implications, the results may be very different from what you expected. You must get well versed with its costs and consequences. We suggest you to seek professional advice and get more information from certificated and professional advisor only.

Procedure

To get started a licensed Practitioner will analyze your financial situation and make sure you satisfy the basic requirements. Your IP will submit your IVA proposal to the Court, which also includes obtaining an Interim Order (a special order to keep your Creditors from harassing you or trying to take further legal action).

Once the Interim Order is granted the Practitioner will contact each Creditor with your IVA. The Creditors will be given a list of all of your assets and liabilities. Once the Creditors approve of your proposal it is up to you to make sure you stick with the agreement and make the monthly repayment regularly.

Pros

  • By using an IVA your information is kept private and nobody will know anything about it including your family.
  • Having an IVA will not affect your business.
  • You will not lose your home as long as you stick to the agreement.
  • You may have a bank account.
  • You can solve your debt in 5 years.
  • Some of your debt may be written off, up to 75%.
  • No further legal action can be taken against you during your IVA.
  • Your credit can be repaired at the end of the process.
  • You can keep your valuable assets.
  • Fewer restrictions than in a Bankruptcy.
  • IVA is legally binding.
  • Payments are affordable. You as the Debtor make an agreement on how much you can afford to repay on your IVA payment plan.

Cons

  • Takes up to five years to pay off. 
  • The minimum monthly payment is £200.00 (in same case could be £300).
  • If you fail to make the payments you automatically go Bankrupt and your assets could be repossessed.
  • IVA will be on your Credit History for 6 years.
  • You could be charged with a criminal offense if you do not provide trustful information to your Creditors and IP.

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