Debt Resources > Debt Solutions > Individual Voluntary Agreement

What is an IVA?

IVA stands for Individual Voluntary Arrangement.  If you can afford £200 a month towards your debts, owe over £15,000 and are struggling to meet your repayments then an IVA might be an ideal solution for you. A licensed professional will arrange a formal agreement between you and your creditors. This is where they will come to an arrangement with your creditors to reduce the payments you pay each month towards the total amount of your debt. The finished result is a majority percentage (up to 75%) of what you owe completely written off. After 5 years of completing the arrangement your debt will be classed as settled and you will become debt free.

How does an IVA (Individual Voluntary Arrangement) work?

After you have explored all the avenues available to yourself with regards to the position you are in and you have decided that an Individual Voluntary Arrangement is the right route for you, the licensed professional will ask certain questions regarding your financial situation. With the information you have provided a repayment amount will be calculated and agreed with yourself.  You will be asked to check and sign the proposals which will have been drawn up based on the information provided and return them to your licensed professional. Once the progress has began an application for an Interim Order may be applied for through the courts, with this in place your creditors can not take any legal action against you. A meeting with your creditors then will be arranged. Nowadays Creditor Meetings are done via the phone and fax so it is highly unlikely you will have to attend as it will be actioned on your behalf.

How is an IVA approved?

To approve an Individual Voluntary Arrangement (IVA), the creditors have to vote for or against the arrangement which has been proposed. Only one creditor has to vote “for” the IVA, which will result in the Individual Voluntary Arrangement being approved. However, if only one creditor votes against and represents 25% or less of you total debt; the other creditors who have not voted will have to vote at another meeting.

Can it fail?

For an Individual Voluntary Arrangement (IVA) to fail the creditor who voted against has to represent more than 25% of the total debt you owe. The reason for this is that 75% in monetary value has to be voted for, for the Individual Voluntary Arrangement to be approved. If some of the creditors do not vote, it will be assumed that they are “for” the Individual Voluntary Arrangement.

Summary

As the Individual Voluntary Arrangement (IVA) is a legally binding agreement, you must keep to the arranged repayments, as once the agreement has reached its term you will become debt free regardless of what is reminding and how much you have paid. Note: Your financial situation will be reviewed during the agreement to capture any change in your circumstances by your licensed professional.