Debt Resources > Dealing With Debt > IVA

IVA at a glance

An Individual Voluntary Arrangement (IVA) is a formal agreement which usually lasts for a period of five years. The agreement is between the person who owes the money, classed as the debtor, and who they owe the money to, classed as the creditor. The agreement states how and how much you will pay your creditors.

A licensed insolvency practitioner has to set up the Individual Voluntary Arrangement as it is a formal agreement.

IVA: The Process

Once the licensed insolvency practitioner has assessed your situation and an Individual Voluntary Arrangement has been agreed is the best solution for you, a proposal will be drawn up from the information you have provided. This will include your income and expenditure, your creditor details with a summary of how the debt is built up and the repayment offer. You will need to sign and return one copy before they can proceed. On receipt of this, the licensed insolvency practitioner will contact all your creditors, explained the proposal for the IVA and request the actual balance you owe to them.

In some circumstances an Interim Order will be requested from your local County Court. This will protect you from any further action being taken by your creditors. Copies of the proposal will be sent to your creditors via email or the fax. For an Individual Voluntary Arrangement to be implemented, a meeting between your creditors must be held.  Nowadays the creditor meetings are held over the phone, so you will not need to attend. 75% of those creditors, who vote, must vote for the IVA, for it to be approved. Once the IVA has been approved it is legally binding for all the creditors even if they do not vote.

Annual reviews of your income and expenditure will be carried out to capture any change in your circumstances. At the end of your arrangement your debts will be cleared providing you have kept to the terms of your IVA.

IVA: The Pros and Cons

IVA Pros

• Once you have completed the arrangement, normally up to 5 years, you will be debt free.
• With an IVA there is no social stigma. Your details will not be published in the local press unlike bankruptcy.
• It can protect your assets from repossession.
• Up to 75% of your debt can be written off
• Your monthly repayments are what you can afford
• No creditor contact

IVA Cons

• You must have at least £15,000 of debt , with minimum 3 creditors
• You must be able to pay £200 per month
• An Individual Voluntary Arrangement can last up to 5 years, where as bankruptcy is 1 year (dependent on circumstances)
• If your salary increases your repayment offer is increased
• The Individual Voluntary Arrangement will be on your credit report for 6 years
• You can not get further unsecured credit.