Individual Voluntary Arrangement Example

Here's how an IVA can help make debt affordable

What is an Individual Voluntary Arrangement?

An IVA is a legally binding agreement between you and your unsecured creditors. It details a structured repayment plan which benefits both you and your creditors.

If you are struggling to repay debt over £10,000, and are resident in England, Wales or Northern Ireland you could have one affordable monthly payment that is distributed between your unsecured creditors.

An IVA is an alternative to bankruptcy. If your creditors agree, you could:

• Write off unsecured debts that you cannot possibly repay 'within a reasonable time'.*
• pay off remaining debts at a rate you can afford, over 5 years (in most cases), and
• retain the money you need for essentials, like accommodation, food and utility bills.

Through an IVA (individual voluntary arrangement) you could also:

• prevent legal action, including bankruptcy,
• have creditors agree to freeze interest and charges, and 
• homeowners - keep possession of your home.

*You could have up to 75% of the debt held within the IVA written off, subject to creditor agreement and only on completion of the IVA. Any secured debts (not included) will remain outstanding.

You will still be expected to pay in a minimum monthly repayment of £150 or more, depending on your circumstances. Your credit rating will be affected for a 6 year period and also if you are a homeowner you may need to release a percentage of your equity. A failed re-mortage could lead to the plan being extended, and the re-mortgage may be on less favourable terms.

If your IVA fails, it could lead to bankruptcy.

Individual Voluntary Arrangement Case Study

The Situation

Mrs. Brooks is a divorcee from Lancashire. Unfortunately she was made redundant over 12 months before contacting Debt Advisory Line. She was then out of work for a further 4 months, before she found a job as a teacher, but she had to take pay cut of £4000 per annum.

Rather than seek help she tried to manage paying her debts by using her credit card for her everyday essentials. This eventually caught up with her when started missing payments and incurring high interest charges. Mrs. Brooks then took the decision to call Debt Advisory Line to get a review of her finances and personalised advice.

After speaking with a Debt Advisory Line advisor

After a discussion with our debt counsellor it was agreed that a payment of £175 was all she could reasonably afford, and that she was eligible for an IVA, saving £270 on her monthly repayments. Over a 5 year IVA, this means she will pay back £10,500, out of her overall debt of £20,424. This will see nearly 50% of the debt written off upon completion.

The outcome

Now everything is in place, Mrs. B is living more comfortably, able to buy essentials and paying her normal household bills without any problem. She knows that her debts, now they are within an IVA, are being settled.

Mrs. Brooks also knows we are still here for her. We'll carry out regular reviews of her circumstances, so if her circumstances change again, her monthly payments could be changed too (as long as her lenders agree).

 In detail:

How an Individual Voluntary Arrangement Works?

Overview:

Setting up my IVA

The information collected for my IVA ensures that:

What happens when I'm in my IVA?

Who can apply?

How is my IVA Approved?

Setting up my IVA 

Once we have reviewed your personal circumstance and identified an IVA as the most appropriate solution we will confirm everything in writing including a breakdown of all the information we require from yourselves. See our IVA FAQ tab for the information we will require.

Once received, we will check all the relevant details, including Creditor balances, and contact each creditor to confirm to them that we are now acting on your behalf. Income and expenditure details provided need to be accurate.

The information collected for your IVA ensures that:

• A fair deal is struck for both yourself and your creditors.
• It makes certain you can live comfortably and afford the payments for five years.
• An IVA is the best option for you.

Once we have collated all the required information, we will pass your case to our Insolvency Practitioner, Mitchell Farrar Insolvency Practitioners, who will then issue your creditors with the IVA proposal and then, on acceptance, will begin to administer your IVA through to completion.

What happens when I am in my IVA?

• You will maintain one affordable monthly payment covering all of your debts for the duration of the IVA.  
• You will be appointed a case manager who will be your point of contact throughout the IVA and who will also conduct regular reviews with you over the period. 
• It is very important that you adhere to requests from your Insolvency Practitioner for the duration of the IVA to ensure there is no possibility that your IVA could fail - See our IVA FAQ tab for more on the effect of failure.

Who can apply?

• You can make an application as an individual or as a couple.
• You do not have to be married to apply as a couple.
• You need to be 18yrs to 70yrs at the time the application is made.
• You also need to be a UK resident, with debts taken out in England, Wales, or Northern Ireland.

How is my IVA Approved?

• The IVA proposal needs to be signed by you, your Insolvency Practitioner and your creditors to make sure everyone is comfortable with the arrangements. 
• The proposal and the evidence of your debt are presented to your creditors. 
• The creditors are given a minimum of two to three weeks to review and respond to the proposal.
• 75% of creditors by debt value must agree to accept your proposal for the Arrangement to be accepted.

Individual Voluntary Arrangement Feedback

Customers like this product

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Date	Rating	Customer Comment	DAL Comment
21-Feb-2013	Good	Good	Thank you for your feedback. We are pleased to hear you are satisfied with the service you are receiving. We have taken your comments on board regarding the issues with your contact details and these have now been amended. Please let us know if there is anything else we can d...
03-Feb-2013	Excellent	Excellent	No Comment
31-Jan-2013	Good	it has been very useful for my financial position i always know how much i need to pay	No Comment
31-Jan-2013	Good	Good	No Comment
05-Jan-2013	Good	Good	No Comment
04-Jan-2013	Good	Its a good solution	No Comment
04-Jan-2013	Good	The help I have been given has dealt with my creditors and I do not fread the post arriving so much now. I am very aware that this debt has to be paid but it would be nice to have a little more free money a month.	No Comment
07-Dec-2012	Excellent	The way it has been done for me has given me peace of mind for the future.	No Comment
04-Dec-2012		Could have been handled better with regards to the point of winning PPI & IVA intro, I have not seen any of PPI wins as a result which is over £15k! Not happy plus untold restrictions & constant move of goalposts for info required, & very difficult to get ANY response, always seem...	No Comment
19-Nov-2012	Excellent	Excellent	No Comment

Individual Voluntary Arrangement FAQ's