What Is an Individual Voluntary Arrangement?

Young couple meeting with a financial advisor

In today’s unprecedented times, some consumers are getting into financial difficulties. They may be considering an individual voluntary arrangement. Gordana Jovanović gives his opinion.

An individual voluntary arrangement (IVA) is a formal agreement between consumers and creditors that can help people repay their debts at an affordable amount.

IVAs are legally binding agreements that can help you resolve debts. You can only get an IVA with the help of an insolvency specialist, and in particular they can help with debt with Arvato financial solutions.

With the help of IVA, you make an offer for the payment of claims against creditors. Once you enter an IVA, creditors can take no further action against you and can’t contact you directly.

In an IVA a single monthly payment is agreed with your current financial situation taken into consideration – this payment is then divided between the people you owe money to. During the course of your plan, all interest and fees associated with your debts are frozen.

At the end of the IVA, the remaining debts may be written off and you can begin your debt-free future.

Benefits of an IVA

  • your insolvency practitioner can help you work out how much you can afford to repay
  • your insolvency practitioner will contact all your creditors and get them to agree to your IVA for you
  • your creditors can’t take any action against you – for example, taking you to a court or making you bankrupt
  • interest and charges are usually stopped

While your IVA is being set up, your insolvency practitioner might be able to get the court to issue an order preventing your creditors from taking further action against you.

Get free debt help and advice

You should get free and independent advice about IVAs and if they are the best way to deal with your debt problem.

The costs of an IVA

An insolvency practitioner will charge a fee for negotiating with your creditors and managing your IVA.

Make sure you understand the full costs of your IVA before entering on one. If you need help, get free advice from an organisation.

How to get an IVA:

Step one

Contact a free and independent debt counselling organization to make sure the IVA is right for you.

Step two

If IVA is right for you, then call an authorized insolvency specialist to act on you. They will help you prepare the IVA and send it to the creditors.

Step three

In case of insolvency, your specialist will help you prepare IVA. You must provide details about:

  • your assets and income that can be used to pay debts
  • your expenses – for example, household and food bills
  • your debts – for example, how much you owe including interest or expenses
  • your creditors – you must provide a complete list, any missed can be reported to the court for your IVA to be cancelled

Step four

Your bankruptcy trustee will arrange a meeting with your creditors to accept your IVA and will represent you. If creditors holding more than 75% of your debts accept this, the IVA will apply to all your creditors.

Step five

If your IVA is accepted, the insolvency practitioner acts as your IVA supervisor. This means that they will manage your payments to your creditors, distributing them as agreed.

Your responsibilities when the IVA starts

If you do not continue with your monthly payments, lenders may cancel your IVA. If your IVA is cancelled, creditors may take additional action against you. They can take you to a court or bankrupt you.

Tell your insolvency specialist if your financial situation worsens, for example, if you lose your job. They will be able to charge your creditors to agree to lower monthly payments.

How an IVA affects your credit rating

Your IVA will be listed in the Individual Insolvency Registry, an online database used by credit reference agencies to update your credit rating. It is harder for you to open new bank accounts, get a loan or buy on credit if you have an IVA.

About the Author

Gordana Jovanović is a writer who has worked in various types of industry, experienced in writing research content in the field of finance and business, technology, law, travel, health and others. For additional help and information please visit: https://www.iva-advice.co/

The information in this article is the opinion of the author and does not constitute financial or investment advice. It is not regulated or authorised by the FCA. Always consult a qualified financial adviser.

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