IVAs

What is an IVA?

An IVA is a realistic alternative to bankruptcy which the government introduced as part of the Insolvency Act 1986 to give people a second chance. It is a legally binding structured repayment plan which benefits both you and your creditors.

Depending upon your circumstances you benefit from:

• Any unpaid balance of your debts written off – as much as 75%.
• One affordable payment which usually lasts for 5 years.
• All interest and charges on your debts will be frozen.
• You will be protected from further court action.
• All contact from your creditors will cease.
• Your monthly contribution is based on what you can realistically afford.
• IVA’s unlike bankruptcy will not be published in your local newspaper.
• It will not affect you job in any way i.e. if you are a police officer or in the armed forces. *(subject to contract)

IVAs have become increasingly popular over the past few years for those who find themselves over committed financially. Last year over 15,000 people entered in to an IVA and are now on their way to becoming debt free and stress free.

Is an IVA suitable for me?

An IVA is suitable for a person who is finding it increasingly hard to pay their monthly credit commitments, but who have assets that under bankruptcy they would lose. In an IVA you will not. If you have no assets then an IVA can present better results to your creditors than in bankruptcy.

What criteria do I need to meet?

You do need to meet certain criteria if you want your proposals to be accepted, which are:

• At least 4 separate creditors.
• A minimum debt level of £15,000.
• A minimum monthly contribution of £200, depending on debt level.
• Be in full time employment.

Requirements to Maintain an IVA:

• You will be required to stick to the full term of the IVA – dependent on circumstances.
• All assets must be declared, if you own assets of excessive value your creditors can ask that they be realised for their benefit.
• It may be necessary to release some of the equity in your property in the 4th year of your IVA.
• You must declare any windfalls, inheritance or pay increases to your (supervisor) Insolvency Practitioner.
• If you bank with one of your creditors you will need to open a new bank account.

How much will I have to pay each month?

This all depends on your circumstances; your monthly contribution is based on your entire household income & expenditure, therefore will be affordable for you. You will be required to set up a standing order with your Insolvency Practitioner, which will then go in to your IVA account.

What will you need from me to commence work on my application?

Your proposal for an IVA is based on information about your assets and your monthly income & expenditure.

The information we require in order to assess your suitability for an IVA is:

• A recent statement from each of your creditors showing balance, account number and the address.
• 3 months recent wages slips (consecutive).
• Valuation of property (if you own your own house)
• Details of any secured loans and a recent mortgage redemption statement
• Full details of all household income and expenditure.

All unsecured creditors must be added to your IVA – whilst in an IVA you must not have any credit commitments other than your secured borrowings.

IVA FAQs