If you have over £5,000 of debt, have two or more different creditors and can afford a minimum of £70 each month towards your debts then you may qualify for an IVA. There are other factors a debt advisor will have to assess such as your property status and your current income to see if you qualify for an IVA. Find out more below or See if you Qualify for an IVA.
An IVA or Individual Voluntary Arrangement is a legal process which enables a debtor to avoid bankruptcy by making an agreement with their creditors to pay off a certain percentage of the debts over a given period (usually 5 or 6 years).
The amount you have to repay monthly is calculated through an analysis of your income and expenditure. Once agreed, the repayments are legally bound by a contract and if you do not meet your side of the deal, the creditors can still force you into bankruptcy.
For an IVA to be accepted, creditors who hold 75% or more of your debts will have to accept the proposal set out by an Insolvency Practitioner. If over 75% of your creditors accept the proposal then all your creditors will have to accept the IVA proposal even some of them originally objected to the IVA.
If you are a homeowner, normally you will be required to release any equity which you have in your property by taking out a remortgage or a secured loan. This money will then have to be paid to your creditors. Once an IVA has been agreed by your creditors, all interest and charges on your unsecured debt will be frozen.Your financial situation will be reviewed quarterly by your IVA supervisor and if there is a change in your financial circumstances, for instance a salary increase, then an increase in your contribution towards your IVA may be required.
An IVA is more than likely to affect your credit rating. If you are struggling with your repayments then your credit rating is already likely to be poor. If you are concerned with how an IVA affects your credit rating then please contact us.
If you fail to keep up your repayments on an IVA or Protected Trust Deed then your arrangement may fail which could lead to Bankruptcy.
Homeowners may be required to release some equity (where applicable) to help pay off some or all your Debts. If your home does have to be remortgaged to release equity, your ability to obtain a mortgage may be restricted and will likely result in you paying a higher interest rate. If you are unable to obtain a remortgage then your IVA can be extended for up to 12 months.
Only unsecured Debts included in an IVA or Protected Trust Deed may be written off by your creditors at the end of the period. Any secured Debts will still have to be paid off in full.
You will have to adhere to restrictions on your expenditure during an IVA and you will also be required to provide proof of income and photo id.
Am I eligible?
- You have unsecured debts greater than £5,000
- You have 2 or more creditors
- You can afford to pay at least £70 per month
Fees with an IVA
There are no setup fees charged! However there are two other fees which are charged for an IVA:
- The Nominee's fee - The Nominee’s fee can vary from £500 to £2500 depending on the number of creditors you have and the amount of work required to be carried out.
- The Supervisor’s fee - The Supervisor’s fee is a monthly fee which covers the specialist work carried out to administer your IVA for the duration of the IVA period (typically a 5 year period). This fee will never be more than 15% of the monthly contribution you make.
Both fees will be incorporated into your monthly payment. All exact fees will be provided to you before you enter any agreement.