The Individual Voluntary Arrangement (IVA)

The Complete Guide to IVA's (2021)

77,973 IVA’s were approved last year alone.

It is fast becoming the most popular solution for people trying to break free from debt.

On this page, we answer EVERYTHING you want to know about the IVA.

Not just the pros, but the cons too.

Let’s begin:

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The IVA - An Introduction

What Is An IVA?

Also known as an Individual Voluntary Arrangement. It is formal debt solution between you and your creditors. It allows you to make payments that are affordable, and lasts typically over a 5 year period.

Any debt remaining at the end of the IVA is written off.

Established in 1986 and governed by the Insolvency Act 1986.  The act was brought in initially for businesses, as an alternative to filing bankruptcy proceedings.

The Company Voluntary Arrangement (CVA) gave companies an option to reach an agreement with its creditors to repay over a longer period of time.

Due to the success of the CVA, the IVA became more popular, with individuals seeing the solution a better option than bankruptcy.

In 1998 just under 5,000 people decided to take an IVA to resolve their debt problems.

Fast Forward to 2019 and just under 80,000 people have decided to choose an IVA within the year.

The Process

How Does An IVA Work?

Set up by a licensed Insolvency Practitioner, how an IVA work is by binding all of your unsecured creditors into a legally binding agreement.

In the agreement, you have confirmation that your monthly repayments are based on what you can afford after your living expenses.

This is then paid for a period of typically 5 years, with any remaining debt written off.

Your debts are bound by the agreement, which means creditors legally cannot contact you in regard to the debt. Instead they will speak to company managing your IVA for its duration.

With the agreement of your lower monthly repayments, all the interest and charges are frozen.

Am I Eligible For An IVA?

To qualify for an IVA and it be a viable solution, there are strict criteria that must be met by the applicant.

In order to be eligible for an IVA, you must;

  • Have over £5,000 of unsecured debt
  • Be able to prove you can afford to pay something towards your debts (At least £85 per month)
  • Have regular income such as employment, pension or benefits.
  • Owe money to two different creditors
 
The above is only an indicator to whether you could be eligible, and should not be used as a guarantee.

Will My IVA Be Accepted?

In order for your proposal to be accepted, we must gain approval from creditors of at least 75% of your debt.

If this is achieved then the IVA is approved. Any creditor who did not vote or rejected the proposal will still be bound by the terms of the IVA, and will be included.

If you are unsure whether your creditors would accept an IVA, get in touch with our team. We speak to the majority of creditors on a daily basis, and will have a good understanding of their voting positions.

97% approval rate from creditors

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What Debts Can Be Included In An IVA?

An IVA can only deal with unsecured debts. 

This means a debt where failure to repay does not result in a repossession of an asset, such as a house or car.

Debts that can be included into an IVA include:

  • Personal Loans
  • Payday Loans
  • Credit Cards
  • Store Cards
  • Catalogue Accounts
  • Overdrafts
  • Council Tax Arrears
  • HMRC Income Tax
  • Tax Credit & Overpayments
  • Electricity, Gas & Water Arrears

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What Debts Cannot Be Included In An IVA?

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Home mortgages cannot be included on an IVA

Debts that cannot be consolidated into an IVA include:

  • Mortgages (unless home has been repossessed)
  • Secured Loans Against Property
  • Car Finance
  • Hire Purchase Agreements
  • Debts Incurred Through Fraud
  • Social Fund Loans
  • Student Loans
  • Court Fines
  • Child Support Arrears
  • TV Licence Arrears

Still unsure what category
your debts are?

No problem!

Get in touch with our team who will be able to tell you in minutes if we can include your debts within an IVA.

Can I Set Up An IVA Myself?

As an IVA is a formal, legal process you cannot set up an IVA yourself. This must be arranged by an insolvency practitioner.

The insolvency practitioner handles every stage of the process.

This includes putting forward your proposal to creditors for agreement, the administration and the supervision of the IVA for its duration.

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How much debt can you write off with an IVA?

Debt write off can vary from 50% to 90%, it all depends on your individual circumstances.

To be able to understand how much you can write off, you must undergo a financial assessment with one of our team. At that point you will be given an estimate of how much you could potentially write off upon completion of the IVA.

We say ‘potentially’ rather than guaranteed for a reason.

With an IVA typically being 5 years, a lot can change with your personal circumstances in that time.

If required, our team can re-review your circumstances and reconfigure your payment.

This could mean the percentage of your debt write off could decrease or increase even more.

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reposessed home

Can An IVA Stop Bailliffs?

Yes it can. Once an IVA is approved it will stop all legal action such as bailiffs, court orders and CCJ’s.

As stated above, this is only once the IVA is approved. Some bailiffs may grant a 30 day window where you can complete your IVA process, will all depend on how far down the legal process you actually are.

Get in touch today to discuss your situation and how we can help.

pros and cons

Pros And Cons Of An IVA

A Brief Overview

IVA Pros

  • Affordable monthly repayments – Repayments are based on what you can afford after your living expenses. This ensures manageable repayments for its duration.
  • Interest and charges guaranteed to be frozen – Your debt owed will not increase. This also includes late payment charges.
  • An end date in sight – As the IVA is over a fixed term, you have a time period where you will be free from debt. 
  • Write off large percentages of debt – In some circumstances, this can be up to as much as 85%.
  • Assets are protected – With an IVA, your home is not in jeopardy and is protected. You cannot be forced to sell your home to meet your debt requirements.
  • No legal action – Whilst complying with an IVA, no further legal action can be taken against you. This includes enforcement officers, bailiffs and debt collection agencies.
  • No More Phone Calls – As with legal action, creditors can no longer contact you in regard to the debt. On an IVA the company supervising the IVA for you will be contacted and liaise on your behalf.

IVA Cons

  • Credit Rating – An IVA has a significant impact on your credit rating, lasting for a period of 6 years.
  • Applying For Credit – Under the terms of the IVA, you will be advised not to apply for credit.
  • Annual Reviews – Every 12 months you will complete an annual review of your financial circumstances. This is to make sure the IVA repayments remain at an affordable amount. This could mean if you are in a better financial position (e.g large payrise) you could be asked to increase your payment.
  • Windfall Clause – During the IVA, if you receive a lump sum, you are obliged to let your IVA supervisor know. The lump sum would be expected to be contributed towards the IVA.

Choosing Your IVA Provider

Where to find an IVA company

There are several companies in the UK who can legally set up and manage your IVA.
With over 75,000 IVA’s in 2019 alone, there are several to choose from. As an IVA can be set up over the telephone and via emails, you have access to all companies across the UK.

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What should I look for in my IVA company?

There are a number of factors to consider when choosing an IVA company to manage your IVA. We would recommend speaking to our team first on 0161 660 4376. 
Our panel help you find a partner company who not only deal with your type of debts, but also the type of service you wish for over the duration of the IVA. 

For example, did you know some companies do not manage IVA’s for clients who have council tax? (not to worry, we do!).

The type of service varies from company to company also.
Some of our clients prefer large call centre companies who are efficient and always have people on hand for calls. Other clients prefer a more personable service, speaking to only 2-3 people over the course of their IVA.

Both forms of companies have their merits, so whatever type of service you require we can help!

Who are the best IVA companies?

The best IVA companies vary depending on what service you are comparing.

Do I want the same people managing my IVA? Or do I want a call centre where someone is always available?

Would the company I am applying with accept the debts I have on an IVA?

As you can see, the ‘best’ company depend on your preference. We will discuss your requirements and recommend a partner from our panel who we feel are best suited to your needs.

Our service to you is always FREE. 

Which IVA companies should I avoid?

You should always avoid a company who are asking for payments to set up or arrange you IVA.

There are plenty of companies out there who will only ask for payment once your IVA has been approved, therefore no risk to you.

Conclusion

Is an IVA worth it?

Ultimately you are the only one who can decide whether the IVA is worthwhile.

We have helped thousands of clients with the Individual Voluntary Arrangement.

The majority have found the solution has transformed their debt problems, and ultimately given them light at the end of the tunnel.

Visit our debt solutions page for more options. We provide an in depth guide (like this one) on everything you need to know about each option to solving your debts.

We understand how big of a decision you are making. 

This is what Professor Debt was created for. To help provide citizens of the UK with debt information.

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How to apply
for an IVA?

To apply for an IVA, you must go through an Insolvency Practitioner.

The Insolvency Practitioner will propose the arrangement to your creditors, and liaise on your behalf.

We can help you apply for your IVA.

We will also inform you of any other solutions we feel may be suitable also.