If you owe over £10,000 to your creditors in debt, individual voluntary arrangements (IVAs) could be the right solution for you. An experienced insolvency practitioner (IP) can help you negotiate an IVA every step of the way.
What are IVAs?
IVAs are lifesavers for thousands of businesses and individuals in United Kingdom (UK). An IVA is an insolvency solution. It allows stakeholders to reach a legal consensus about the amount of money owed and payback terms. Initially devised to cater to business generated insolvency, IVAs are now emerging as a popular solution for individuals who owe large sums of money (typically more than £15,000).
An individual voluntary arrangement (IVA) is a legally binding agreement between you and your creditors to pay back your debt at an affordable rate over an agreed time-frame (usually between 5 to 6 years).
Here are some quick facts about IVAs:
- In IVA, you agree on a fixed monthly payment with your creditors. This sum is then divided up between unsecured creditors.
- If you qualify for an IVA, you can write off between 25% to 80% of your debt. Consult an IP right now to find out how much leniency you can expect.
- You may also qualify for an IVA if you owe a lump sum to your creditors.
- IVA requires rigorous negotiation, planning and budgeting. You would need an expert or an insolvency practitioner to help you go over your options and plan a proposal.
- IVA is legally binding. Once you enter an agreement, your creditors cannot take legal action against you or even contact you directly. Your IP can handle meetings with your creditors throughout your IVA.
- IVA is only available in England, Northern Ireland and Wales. Residents of Scotland can look into Protected Trust Deeds (PTD) instead.
- An average client with a debt of up to £60,000 can get 50 to 60 % of their debts written off under IVA.
How does an IVA work?
IVA freezes your debts and allows you to pay your creditors in fixed monthly installments over a set period of time. Usually an experienced IP helps you negotiate an affordable rate, prepare proposals and mediate with your creditors. Once three fourth (or 70%) of your creditors agree on your terms and enter an agreement, any money you owe after the selected period is written off.
Note that even though an IVA covers common debts such as:
- Personal loans and catalogue debts
- Council Tax arrears
- Hire purchase debts
- Credit and store cards
- Mortgage shortfall
- Money you owe to HMRC e-g income tax
IVA does not cover the following categories:
- Child maintenance or child support dues
- Certain forms of car finances
- Student loans
- Court fines
How can Money Advice Service help?
If you make a steady stable income or owe a lump sum of money to many creditors, an IVA might be the right solution for you. Before you get into an agreement though, you need to go over your options with an expert and get advice on the perfect IVA plan.
A seasoned IP will first understand your personal and financial situation and then help you prepare a proposal pitch to your creditors. Experienced debt professionals at Money Advice Service can also give you an estimate of how much debt you can get written off and help you deal with creditors throughout the life of your IVA.
Here is what our brilliant insolvency practitioners can do for you:
- Help you prepare an IVA proposal to pitch to your creditors
- Engage with you and understand your distinct situation to dispense useful advice tailored to your debt issues.
- Give you a holistic overview of the options you can use to become debt-free.
- Handle meetings with your creditors
- See if you have already availed all the benefits and entitlements you qualify for
- Keep your information and records confidential
- Prepare a five-year budget plan for you
Money Advice Service has a team of experts who go out of their way to hear you out and provide you with free debt-related advice. You can choose to set up an online meeting, call us or meet one of our IPs face to face. Take the first step towards becoming debt-free now!