An IVA is more formal agreement between you and your creditors.

It allows you to pay back your debts over a fixed period of time, normally 60 months, but this can vary. As the IVA is a legally binding arrangement between you and your creditors, the IVA also comes with the added protection that whilst the IVA is in place, your creditors cannot take further action against you. They also cannot contact you by phone or letter.

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An IVA is considered a form of insolvency but was introduced as an alternative to bankruptcy. Under typical IVA guidelines an IVA will have to be administered by a licensed insolvency practitioner. The insolvency practitioner will also collect your monthly payment into the IVA and distribute it to your creditors.

Under an IVA most people will get a portion of debt written off. The amount that gets written off will vary from person to person, but once you have completed the IVA any debt that is still existing will be written off.

Your name will be entered onto the insolvency register which can be found here

Benefits

  • A single affordable monthly payment.
  • A fixed repayment period (usually no more than 60 months).
  • An agreement that your creditors will freeze interest and stop any charges so your debt balance does not increase.
  • Protection from further action by your creditors.
  • On completion of your IVA your creditors legally write off any debt outstanding.
  • If you own a home, you are unlikely to lose it as long as you comply with the terms of your proposal.
  • No advertising in papers.

Disadvantages

  • Should the IVA fail, the debtor can still be made bankrupt.
  • You may be required to introduce an element of your equity into the IVA, usually towards the end of the IVA.
  • 75% of the creditors based on the value of debt have to agree to the IVA
  • There are restrictions to certain types of expenditure.
  • The Supervisor must be advised of any changes in personal circumstances arising during the IVA.
  • Depending on the level of overtime or bonuses an individual receives, they may be expected to contribute an amount of this towards the IVA.

Not everyone can qualify for an IVA and in some cases it could impact your job, however most are not.

You can call one of our advisers on 0800 97 88 495 or email info@debtsupportservice.co.uk to find out if you qualify for an IVA.