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An IVA or Individual Voluntary Arrangement is basically a formal agreement in which someone who is in debt (the debtor) arranges a binding and formulated way of paying back a fixed amount of the money they owe to their creditors (the people they owe money to) for an agreed amount of time (usually 5 years).

IVA's are particularly appropriate for individuals or small businessmen who believe that they will be able to pay back more of their debt if they can continue working or stay in business and keep trading rather than going into bankruptcy.

As an IVA is a formal legal arrangement there are several specific criteria needed to qualify:
  • More than £15,000 of unsecured debt

  • 3 or more creditors

  • Disposable income of at least £200/month

  • Genuinely struggling with their debt

IVAs are available to residents of England, Wales and Northern Ireland. If you live in Scotland you may qualify for a Protected Trust Deed.

Set up by a licenced Insolvency Practitioner an IVA is a contract that must be agreed by 75% (by value of money owed) of the creditors and then allows the debtor to pay back the money they agree for the arranged period of time. The Debtor is then legally bound to pay the agreed amount to the Insolvency Practioner who then distributes this to the creditors.

It will often be expected that if the Debtor has a sufficient amount of equity in a property they own then some of this will be released and paid to the creditors, or a charging order will be placed against the property entitling the creditors to some the proceeds when the property is sold. It is also generally accepted that if an endowment policy is linked to the mortgage, it will be cashed in and paid to the creditors.

That said, the amount paid back is usually less than the original amount of debt owed and once the term of the IVA is complete the debtor will be considered to be debt free.

There are many benefits with an IVA:
  • Single & affordable monthly payment Your monthly contribution is worked out according to your individual income and expenditure profile, so that you only pay what is reasonably within your budget.

  • Debt-free in 60 months Assuming the IVA is adhered to, after 60 payments any outstanding debts included in the IVA are usually written off, leaving the you free to make a fresh start.

  • Interest & charges frozen This is a part of the IVA legislation, so you have a guarantee that the debts covered by the arrangement will not increase during the life of the plan.

  • No more threatening communication All letters and phone calls from creditors must, by law, come to the insolvency practitioner as the supervisor of the IVA. You can then get on with clearing your debts without hassle from your creditors.

If you think that an IVA maybe an appropriate for you please email us at enquiries@comparepropertybuyers.co.uk.