What is an IVA?

An Individual Voluntary Arrangement (‘IVA’) is a formal and legally binding agreement between you and your qualifying creditors to pay back your debts over a period of time, with outstanding balances on included debts being discharged upon successful IVA completion. An IVA is available to customers in the UK (excluding Scotland) who have a minimum of £5,000 of qualifying unsecured debt. Residents of Scotland have access to a solution called a Protected Trust Deed, which although similar to an IVA is not exactly the same, therefore its own benefits and disadvantages/risks must be considered independently.

Benefits:

. Interest and charges on included debts will be frozen.
. All of your included debts will be consolidated into one monthly payment.
. Your monthly IVA payment is based on your own financial circumstances to ensure this remains affordable for you and your situation.
. Included creditors are no longer able to contact you regarding debt repayments.
. You are legally protected from action being taken against you by included creditors.
. There are no upfront fees; fees are incorporated into your monthly IVA payments.

Important Considerations:

. If you’re a homeowner, you will be asked to try and re-mortgage 54 months into the IVA term, which may result in a higher interest rate. If you cannot remortgage, you may be asked to extend your IVA by 12 months instead.
. Failure to keep up with your IVA repayments could lead to bankruptcy.
. Your IVA will appear on a public insolvency register. . There are restrictions on the expenditure of a person who enters into an IVA. . An IVA is subject to the approval of the majority (by value) of your creditors; they do not have to agree. . Only the balances of debts included in your IVA will be written off on successful completion, any debts you have outside of your IVA will remain outstanding.
. Entering an IVA can a severe impact on your credit rating.