IVA Explained

IVA Explained- an IVA, or Individual Voluntary Arrangement, is a formal agreement between you and your creditors in which you agree to make regular monthly payments to an IVA provider in lieu of your normal repayments. An IVA is designed to enable you to repay a percentage of your debt over a fixed period. During this period, your creditors cannot commence bankruptcy proceedings or use any other method of debt collection. Because of the formal nature of an IVA, it has to be arranged through a licensed insolvency practitioner.

IVA is for the individuals who have:

• Outstanding unsecured debt of more than £17,500
• Three or more unsecured creditors
• A disposable income of minimum £225

Advantages of an IVA

• Government support legislation
• The creditors do not call and write to you
• Charges and interest on your outstanding amount are frozen
• You only have to pay off what you actually can afford
• Payments are made for a fixed period

Why use an IVA

IVA provides a guaranteed solution, which an informal debt solution does not provide.

• You have agreement with your creditors for making a single reduced payment every month
• Once agreed, the creditors are not permitted to add any extra charges or interest to your debt
• It includes a sensible span of time i.e. of 5 years
• Creditors can not randomly ask for changes to the agreement

IVA purpose

It is lawfully binding agreement between your creditor and you. It assists greatly those people in financial difficulties by laying down a formal agreement for settling their outstanding debt in a more affordable way.
What can be included in an arrangement?

Each monthly payment is based on the debtor’s disposable income. Depending on your circumstances, this can lead to a significant portion of your debt being written off.
 
IVA is generally appropriate for the following kinds of debt including:

• Credit cards
• Store cards
• Overdrafts
• Catalogues
• Personal loans
• Council Tax Arrears
• Income Tax Arrears

There are several debts, which are not appropriate for IVA, these includes the debts that are protected against vehicles or property like hire purchase agreements, mortgages, parking offences, rent.