Individual Voluntary Arrangement

Do you have a significant amount of debt that you can’t afford to repay in the near future? Is it unsecured (such as credit/store cards, personal loans, overdrafts, etc.)?

If you’re in this situation, and you live in England, Wales or Northern Ireland, an IVA – which is also known as an Individual Voluntary Arrangement – may be able to help you.

How exactly does an IVA work? Read on to find out more about this UK debt solution.

What is an IVA?

An IVA, (which is the common term for an Individual Voluntary Arrangement), is an insolvency solution designed to help people repay whatever they can afford towards unsecured debts they’re struggling with.

If you can’t afford to repay your debts in full in a realistic amount of time, a debt expert may recommend that you enter an Individual Voluntary Arrangement.

How does an IVA work?

Once an IVA is agreed, you will:

Make regular monthly payments, of whatever you can afford after your basic living costs have been covered Be protected from any further legal action Have any remaining debt written off on successful completion – usually after 5 years (if you’re a homeowner, you may also have to release some equity beforehand).

How could I set up an IVA?

An IVA can only be set up with the assistance of an Insolvency Practitioner (IP). They’ll be responsible for drawing up an IVA ‘proposal’ with you – a document that shows your unsecured lenders how much you can afford to repay every month, which will help them to decide whether to accept your IVA or not.

If the majority of your unsecured lenders – specifically, those who hold 75% or more of the debt value – agree, your IVA will go ahead.

Are there any disadvantages to an IVA?

An IVA also comes with some downsides to consider.

Credit reference agencies will make a note of an IVA on your credit record, and it’ll remain there for six years from the day it begins. This is likely to affect your ability to get any further credit during this time – and you may be charged more for any credit you do get.

Is an IVA right for me?

An IVA is just one of several debt solutions that could work for you. A debt adviser could help you find the most suitable approach for your financial needs and requirements.