IVA stands for Individual Voluntary Arrangement and is an arrangement where you pay just one affordable monthly payment to your creditors over a period of 60 months. At the end of your IVA you will be debt free as any outstanding debt is written off. IVAs were introduced by the government as part of the Insolvency Act 1986, and are legally binding on all parties.
If you have a severe debt problem and are struggling to meet your monthly repayments, an IVA could be the best solution for you.
* Do you owe at least £15,000 of unsecured debt?
* Do you owe this to 3 or more creditors?
* After you have paid your household bills (including secured loans) do you have at least £200 per month left over which can be paid into your IVA?
* Are you sick and tired of being stuck in the vicious cycle of borrowing and then borrowing more but the problem never goes away?
* Do you want to avoid bankruptcy?
Because applying for an IVA is a complicated legal process and can only be undertaken by a licensed Insolvency Practitioner, the costs of setting up the IVA are quite high.(Don’t worry though as One Advice do NOT charge you a penny. Our service to you is totally free of charge. Your creditors pay our costs from your monthly payments.)
Because your creditors pay our fees, the final return (dividend) to the creditors is less than what you pay into your IVA. Your creditors will apply two basic rules in deciding whether or not to accept an IVA:
1: Where your debts are below £15,000 the cost of the IVA as a proportion of the debt is too high to be economically viableWhere the monthly payment is under £200, the cost of running the IVA would take up to much of the money coming in to make it economically viable.
2: So if your debts are low, say under £15,000 and you are only re-paying £8,000, after our costs the return to your creditors is not high enough for them to accept the IVA. For that reason, IVAs tend to start at £15,000.
Simply! We will do all the work for you. You don’t have to worry about a thing. And you haven’t paid a penny. Through a series of telephone meeting we will prepare a detailed IVA proposal, which once you have approved it will be issued to your creditors to vote. If they vote in favour of your IVA, it becomes legally binding on your creditors.
If you are in debt then you need to seek expert advice. One Advice can help you find the right debt solution for you. For free advice contact us on 0800 019 5870 or take the One Advice 1 Minute Debt Test to see if an IVA is the right solution for you.
No. Unlike in bankruptcy you will not be required to sell your share in your home nor sell other assets to be shared amongst your creditors. Under an IVA, your mortgage, and any other secured payments, will be prioritised, which means we will ensure that you repay them before your IVA contributions are taken. Therefore your home is protected.
An IVA is a repayment plan which allows you to make reduced payments to your creditors. This can only be done with unsecured debts. If you owe money which is secured against an asset, i.e. your home or car, and you fail to meet your repayment obligations your creditors can take various actions including forced sale of the asset, i.e. your home. Therefore no deal can be done with secured debts.
As explained above, an IVA will determine your secured debts and ensure you can afford to meet your monthly payments by prioritising them. Your IVA therefore only covers your unsecured credit commitments such as; credit cards, store cards, catalogues, personal loans, overdrafts etc.
The IVA process is legally and financially complex and is therefore only allowed by law to be undertaken by licensed Insolvency Practitioners. If you act promptly to supply us with information that we ask for, we should be able to process your IVA application in 4 to 6 weeks. Some cases are so highly complex that they can take a little longer.
A licensed Insolvency Practitioner is the only type of financial advisor that is seen as an ‘expert’ in insolvency procedures under law. No doubt you have spoken to other so called experts before; you know the type, those who have had 2 days training in a call centre! They are not experts. Even mortgage advisors are not defined as experts under legislation. Insolvency Practitioners study for years and years to pass very difficult exams, mostly after previously qualifying as a Chartered Accountant or Lawyer. These experts are then qualified to apply Insolvency Legislation and act as Administrators and Liquidators of companies. Some Insolvency Practitioners choose to provide their valuable expert service to help indebted individuals to sort out their financial problems without having to borrow more money.
Typically an IVA should last for a 60 month period.
Firstly, if your creditors are chasing you before your IVA is accepted, the Insolvency Practitioner can apply to a county court for an ‘Interim Order’. Once in place, your creditors cannot continue with or commence new debt recovery proceedings against you. The Order remains until your IVA proposal is proposed to your creditors.
Secondly, once your IVA has been accepted, providing that you maintain your monthly payments your creditors are not allowed to take any action against you. They are legally obliged to contact us, acting as your legal representative. They are not allowed to contact you. Sometimes it takes a few months for all the different departments in your creditors to know that you are in an IVA as the communication within these big companies is often very poor. Nevertheless, within a few months you should not hear from your creditors again.
An IVA is a private legal agreement between you and your creditors. IVAs are not published in the local papers so you should not suffer from adverse publicity
Yes, it is usually possible for you to keep your vehicle, especially if there is a set reason why you need it, such as family commitments or because of your job. However, you might have to sell your car for a lower value vehicle. If you car is on hire purchase then speak to one of our IVA advisors as you may have to sell it back to the finance company.
Yes. This is a complex matter so we will not discuss it in detail here. Self employed people can undertake IVAs and small companies can do CVAs. If this applies to you then we will discuss this in detail with you.
Yes, but in reality you probably will not want to. If you owe money to the bank where your salary is paid into, guess what they could do when they receive funds…..take it all! One of the many benefits of an IVA is that you can open a new ‘simple’ bank account (without a cheque guarantee card or overdraft facility) with a bank that you do NOT owe money to. This ensures that you are totally in control of your income.
Yes. Once you apply for your IVA, your Insolvency Practitioner will notify the appropriate authorities and courts. Your Insolvency Practitioner will argue on your behalf that an IVA is in the best interest of all parties. If this is accepted your Bankruptcy will be annulled once your IVA is approved
If any of your financial or personal circumstances change within the duration of your IVA then you must contact your Insolvency Practitioner immediately. It is possible to modify your IVA to reflect your new financial situation. If the problem is more of a short term nature, emergency payments breaks can be granted. Whatever you do, speak to your Insolvency Practitioner. If you miss any payments without the Insolvency Practitioners permission then there is the chance that your creditors can commence bankruptcy proceedings against you. Successfully completing your IVA is the only way that you can be protected from your creditors.
Yes, but don’t worry. Borrowing too much money is what got you into this over indebted financial state in the first place. A poor credit rating will affect your ability to borrow more debt, but the last thing that you should be thinking about is borrowing more money, whether unsecured or secured.
If you are making monthly payments that are lower than the contracted amount or have missed payments then your credit rating is already damaged.
An IVA will allow your credit rating to be repaired more quickly. As soon as you enter an IVA it is stamped on your credit file and lasts for 6 years. However, the IVA lasts for 5 years, so in reality you have just 1 year where you may want to borrow with a poor rating. After that year, the IVA is removed from your credit file and you are shown as having no debt.
If you qualify for an IVA, it is often your best way to become debt free without the risk of losing any of your assets. An IVA means that you can avoid any of the same stigmas or professional disqualifications associated with bankruptcy, for example details about your IVA will not get publicised. For more information please see the One Advice IVA or Bankruptcy page.
Your landlord does not need to know about your IVA as long as payments are kept up to date.
Our fees are detailed in the IVA Proposal that is agreed to by you and your creditors (the people you owe money to) at the Creditors Meeting.
In an IVA all you pay is the amount you can realistically afford each month for the period of your arrangement (usually 60 months) and that is all you have to pay as long as you keep up the payments. You will not be expected to pay fees directly yourself and you will not be asked to pay additional fees over and above your agreed monthly IVA payment.
In return for making your IVA payments each month, your creditors agree to write off the debt you can't afford to repay and pay our fees out of the payments you have made to them. As such Insolvency Practitioners state that it is actually your creditors that pay our fees thereby essentially making the IVA free to you.
This is an important point. We are not saying that your IVA is free. You will make the monthly payment that you can afford and there are no additional fees. Out of these payments, your creditors effectively pay our fees.
There is not a magic figure that your creditors will look for in making the decision whether to accept you IVA proposal or not. This is a two way decision that must be in the interest of both parties; you and your creditors.
Firstly you: Your creditors want to see that you are proposing to make a fair payment that is affordable to you and is therefore sustainable for the duration of the IVA.
Secondly, your creditors: Your creditors will in turn agree to freeze all interest and charges and write off a large proportion of your debt. They will cease all collections and recovery activity, legal action, telephone calls and letters.
We will detail your household income (take-home pay and benefits) and expenditure (the cost of living i.e. food, utility bills and secured lending). No account has been taken to repay your unsecured debts at this stage. By deducting your expenditure from your income you are left with an amount (often called ‘Residual’ or ‘Disposable’ income) which is all you have left to service your unsecured debts. In the example below, we would expect you to make a monthly contribution to your IVA of £250 to repay your unsecured creditors.
| Monthly Income | Monthly Expenditure | ||
| Your take home pay (inc. overtime) | £1,200 | Mortgage/Rent | £700 |
| Partner’s take home pay | £690 | Council Tax | £100 |
| Other income (Benefits, maintenance etc) | £100 | Water/Gas/Oil/ Electricity/Phone/Mobile | £100 |
| Food/Household/Clothing | £600 | ||
| Car Expenses/Finance | £190 | ||
| TV Licence/Rental/Sky | £30 | ||
| Public Transport | £20 | ||
| Total household income | £1,990 | Public household expenditure | £1,740 |
| Monthly Disposable Income | £250 | ||
Each case is different and what your creditors will accept depends on your personal circumstances. No doubt you have heard of IVA cases where up to 80% of the debt is written off. These are true cases but they are also exceptional cases. The norm is much lower at around 60%.
Example of Debt Write Off:
| Your Unsecured Debts | £30,000 | |
| Contracted monthly payment | £750 | |
| Disposable Income | £250 | (from the above example) |
| Number of months in your IVA | 60 | |
| Contributions into your IVA | £15,000 | (£250/month x £15,000) |
| Debt Written Off | £15,000 | (£30,000 - £15,000) |
| Debt Written Off | 50% | (£15,000 / £30,000) |
Insolvency Practitioners are recognised in law as experts and are licensed to practice by one of the following bodies who ensure their compliance and regulate their service.
Yes. If you wish to pay a lump sum into your IVA, then we can arrange a variation meeting with your creditors to offer it and confirm any final settlement.
Under normal circumstances this will not happen, but it may be that you inherit a large sum or win the lottery. This is usually called a ‘windfall’. There will be a ‘windfall’ clause in your IVA contract that will require you to pay the money into your IVA. As your creditors have agreed to freeze interest and charges and write off a large proportion of your debt, it is only fair that you should come to a new arrangement with your creditors.
Your proposal needs 75% of the creditors (by value of debt owed) to vote in favour for it to be accepted. For example, if you owe £40,000, and every creditor voted, then you would require £30,001 of your creditor votes to be in your favour.
If the creditor (or group of creditors) that refuses your case is/are owed more than 25% of your debt then your IVA application has failed.
One of the most important tasks of the Insolvency Practitioner is to ensure that they obtain enough votes to get your IVA accepted. Insolvency Practitioners would not normally proceed with a case that would not get sufficient votes as it reflects badly upon them. If your Insolvency Practitioner decides to go ahead with your IVA proposal to your creditors, there is a good chance that it will be accepted.
In effect nothing, because we are one of the longest established and largest debt solutions companies in the UK. One Advice specialises in IVAs and we are very successful at getting them accepted by creditors. Therefore we can afford to absorb the cost risk of the very few rejections that occur and unlike most Insolvency Practitioners do not need to charge you upfront fees.
No, as an IVA is as legal process it means that once it has been set up it cannot be cancelled.
This might happen whilst your IVA is going through, but as soon as it has been approved then they cannot take any further action.
For an IVA you will probably have three or more.
As soon as your IVA proposal is prepared then the court will be notified, which is usually sufficient to stop proceedings. If this does not happen then your advisor will write to the court and the creditors.
Providing that all the terms of your proposal have been carried out, then your creditors will have no further claim against you and any outstanding debts will be written off.