An IVA – or Individual Voluntary Arrangement – is a debt solution that could help you if you’re having serious difficulty making your monthly repayments to your unsecured lenders.

What is an IVA?
An IVA is a form of insolvency, often considered to be a preferable alternative to bankruptcy – without the potential pitfalls (such as home repossession).

It’s a legally binding agreement between you and your unsecured lenders in which you could make one agreed monthly payment specifically tailored to your situation over an agreed period of time – normally five years. The idea is that you’d pay as much as you can afford in that period, since you can’t afford to repay your debts in full within a reasonable time.

On successful completion of your IVA, the remainder of your unsecured debt will be written off.

Though entering into an IVA will only directly help you tackle your unsecured, ‘non-priority’ debts (credit cards, store cards, etc.), your monthly repayments towards your IVA will be worked out based on what’s left after all your essential expenses (such as utility bills & mortgage repayments) have been covered – so you should be confident you can make all your payments every month.

What do I have to do to get an IVA?
If you’re considering an Individual Voluntary Arrangement (IVA), remember that, as it’s a legally binding agreement, it can only be processed by a professional Insolvency Practitioner (IP) – and only if they think it’s the best possible solution for your circumstances.

If your Insolvency Practitioner considers an IVA the right option for you, they will then draw up an ‘IVA proposal’ based on where you stand financially and the amount you can affordably repay every month – which is then reviewed by your lenders.

For your IVA to go ahead, lenders representing 75% or more of your total unsecured debt value must vote in favour of your proposal.

If you’re a homeowner and your IVA is accepted, it’s highly likely you will have to release equity in your home in the 54th month.

Finally, bear in mind that an IVA would not be an appropriate solution if you can’t commit to regular payments.

Will an IVA affect my credit rating?
An IVA will remain on your credit record for six years from the day it begins. This means that, if your IVA runs its ‘usual’ course of five years (as it would in most cases), it can affect the cost and availability of credit for a year after its conclusion.

About the Author:
What do I have to do to get an IVA? If you’re considering an Individual Voluntary Arrangement (IVA), remember that, as it’s a legally binding agreement, it can only be processed by a professional Insolvency Practitioner (IP) – and only if they think it’s the best possible solution for your circumstances.