Quick Guide to: IVA

The One Advice quick guide to IVA (Individual Voluntary Arrangement).

What is an IVA?

IVA stands for Individual Voluntary Arrangement. It is a legally binding contract between the debtor and the creditor. Under an IVA, all debts become frozen and the debtor makes a set monthly payment over 60 months. At the end of the agreement any debt is written off.

Is an IVA for me?

Not everyone qualifies for an IVA. You need to seek expert advice, and One Advice are leaders in our field and we would only ever offer you an IVA if we believe that it is your best option out of debt.

If an IVA is not for you then a debt management plan could still allow you to regain control over your finances, as you make one reduced payment to your creditors. 

IVA Advantages

• You only pay a monthly sum that you can afford.
• The debt that you cannot afford to repay will be written off.
• You don’t have to risk losing your home.
• Creditors are bound by the IVA once it has been accepted.
• No risk to your job or career prospects.
• Fewer restrictions at the end of the IVA term, in comparison to bankruptcy.

IVA Disadvantages

• You will have to make monthly payments for five years.
• Missing a payment may mean that creditors will start bankruptcy proceedings against you.
• You may have to release equity in your home.
• IVAs are recorded on a publicly available register.

How can I set up an IVA?

You are not able to set up an IVA on your own. An IVA must be supervised by an Insolvency Practitioner. They look at your income and expenditure to help you to agree how much you can afford to pay on a monthly basis, they will deal with your creditors on your behalf.

What about bankruptcy?

Bankruptcy means that a debtor is forced to sell their assets in order to repay their creditors, this can mean that a bankrupt can lose their home or car.

The greatest advantage of an IVA is that your assets can be excluded from your proposal, so you do not have to risk losing them. The restrictions after the IVA are also much less severe than bankruptcy and it is not advertised in your local press.