Individual Voluntary Arrangement (IVA)

Subject to your individual circumstances, you could qualify for an IVA. If you have unsecured debts over £5,000 with 2 or more creditors, have a regular income and a monthly surplus of at least £85 after essential expenditure. In addition to the following;

• You must be insolvent, which means you can’t repay your debts as they fall due, or that your debts are more than your other assets.
• You must be able to demonstrate proof of your circumstances.
• You can only obtain an IVA by using the services of a licensed Insolvency Practitioner, who acts initially as a “Nominee” to assist you to prepare all the necessary documents (once your IVA is approved a “Supervisor” will be appointed for the duration of your IVA).
• For an IVA to be accepted, 75% of the voting creditors by debt value must approve e.g. any single creditor with 25% or more of the overall debt level must not reject.

• A fee is charged by both the Nominee and the Supervisor in respect of these services, both of which are included within your contributions.
• Your credit file will be affected and the footprints of an IVA will remain on your credit file for six years.
• You must comply with the terms of your IVA otherwise you could face bankruptcy proceedings.
• It is the decision of your creditors whether or not an IVA proposal is approved.
• IVAs typically include a “windfall” clause, which means if you come into some money (e.g. an inheritance) this is taken into account and you could be required to make increased payments or contribute all of any windfall.
• If your income increases (salary, bonus or overtime) throughout the lifetime of the IVA your monthly contribution may increase.
• Any debts that can’t be included in your IVA will be your responsibility to pay, for example court fines, student loans or money owed under family court proceedings (these debts will be considered when calculating your expenditure to ensure that payments to these debts can be maintained throughout the duration of your IVA).

First, we will look at your current level of debt, your income and expenditure and your monthly surplus. If we think an IVA is your best option, we will draft an IVA proposal to present to your creditors for the settlement of your current debts.

Creditors will then review your proposal and will usually take a commercial view when deciding whether or not to agree to the IVA.

Under the terms of your IVA, if you are a homeowner and have equity in your property, you may be required to refinance six months before the end of the arrangement and pay the money released from the refinancing into your IVA.

If you have equity of less than £5,000 you would not be required to refinance.

Refinancing to release equity to pay into your IVA is not restricted in the same way as taking out a new mortgage would be. However, it may still be difficult to find a mortgage company that will lend to you while you’re in an IVA.

If you can’t refinance, or if it would be too expensive to do this, you may need to make extra monthly payments into your IVA, increasing the term by 12 months. You can also get a third party to provide money for this.

At the start of an IVA, an assessment of your income and expenditure items is taken and thereafter reviewed annually. You will need to adhere to your budget so that your spending remains within guidelines agreed by creditors.

An annual financial review of your income and expenditure will take place on each anniversary of the approval of your IVA until completion. This will determine whether you can afford to increase your monthly contributions. Increases in your living expenses and changes in circumstances are taken into account during this review. There are restrictions on the expenditure of a person who enters into an IVA.

There will be no upfront fees charged. The Nominee’s fees and Supervisor’s fees are paid from your agreed monthly contribution. If you become able to repay your debts in full the amount you would pay would include these fees & statutory interest.