How An IVA Works

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 IVA can be terminated, putting you back to square 1. For an IVA to be accepted, of the creditors who vote, at least 75% (in value) will have to accept the proposal. Once accepted all your creditors will have to accept the IVA proposal even if some of them may have originally objected to the IVA. If you are a homeowner, normally you will be required to release equity which you have in your property by taking out a remortgage or a secured loan in the final year. 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 annually 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. Also, if you circumstances have worsened, it is possible in most cases to negotiate revised terms. An IVA is more than likely to affect your credit rating. If you are currently 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, or anything else, then please contact us.