What is Individual Voluntary Arrangement or IVA

A formal and legally binding agreement between you and your creditors to repay your obligations over time is known as an individual voluntary arrangement, or IVA. This indicates that it has been accepted by the court and that your creditors must abide by it.While you have an IVA your creditors should stop:

interest charges on debts

pursuing you to collect your debts

When you are enrolled in an IVA, you must:

make the agreed-upon instalments, which are often made in a lump sum or a single monthly payment.

If your income increases or you receive any extra money, inform your IVA provider.

not obtain new credit, such as loans, without permission.

Any amount of debt is eligible for inclusion in your IVA. There are no upper or lower bounds. Since an IVA has significant fees, it might not be the best choice if your total debt is less than £10,000.

You should look at other choices for getting out of debt if you don't have a big sum of cash or recurring payments to make into an IVA. You can find out more about various debt solutions.

A qualified individual known as an insolvency practitioner must set up an IVA. For the IVA, the insolvency practitioner will charge fees.

Before utilizing a debt management company, exercise caution.

Debt management businesses are businesses that offer to assist you in managing your debts. They might try to get in touch with you directly or you might see their web advertisements.

Without using a debt management business, you can obtain an IVA. You can find an insolvency practitioner yourself, who will walk you through the procedure, and it's typically less expensive.

Since a debt management company charges a fee on top of the insolvency practitioner's expenses, their services are likely to be more expensive.

Before deciding whether to use a debt management business, find out how much they will cost.

To start an IVA without a debt management company - you can find an insolvency practitioner yourself on GOV.UK.

How the payments are made

You will negotiate a repayment schedule with the insolvency practitioner if you choose to file for an IVA. A large sum, regular payments, or a combination of both may be used.

Your creditors must approve the repayment plan, which should be based on an amount you can afford. The IVA will often last for 5 or 6 years if you're making monthly payments.

You will pay the insolvency practitioner your debts. They will divide the remaining funds among your creditors after keeping a portion for their costs.

While you are on an IVA, the insolvency practitioner will examine your circumstances once a year. Your IVA payments may alter if your income fluctuates. For instance, you will be required to contribute more to your IVA if your compensation increases at work.

You won't be responsible for making up any payments that aren't sufficient to pay off your obligations completely by the time your IVA expires.

If you receive a one-time payment

A windfall that you obtain during your IVA, such as an inheritance, will often be collected and paid to your creditors. Even after your IVA has ended, your creditors may still be able to collect any money you are owed as a result of an event that occurred before it.

If you receive a lump sum after your IVA is over, see a financial advisor.

Verify the debts that might be included in an IVA.