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An IVA or Individual Voluntary Arrangement is a very powerful tool that you can use to control your personal financial situation. It is a formal agreement that is made between the debtor which is the person that owes the money and the creditor which is the person that the money is owed to. Is an IVA the solution for you?

An IVA proposal lays out how the debtor will repay the creditor over a 5 year period. This is a legal document that holds up in a court of law which means it must be completed by a licensed insolvency practitioner. There are many throughout the UK that can assist you if this is an option that looks right for you. Debt Advice Online have helped thousands of people with IVA advice.

How does an IVA work?  

When you attend for your appointment with your licensed insolvency practitioner your case will be assessed and then a plan letter will be mailed to you. It will explain the course of action that is recommended. You will then sign the copy and return it. Once you have consented all of your creditors will be notified that a proposal for an IVA is being prepared and they will the need to confirm the amount of money owed to them and forward the information back to the practitioner.

The proposal will include how much you take home, what your expenses are, details on your creditors, history of your debts and they built up and then of course the most important part a repayment proposal schedule which includes payment size and duration. It is important that you go over this information carefully and ask any questions you might have.

There are some cases were the proposal must go to the local County Court requesting an Interim Order and asking for the courts approval. This protects you from any further action by your creditors which includes any bankruptcy proceedings.

Next your creditors will receive a copy of the schedule of repayment and all the details incorporated in the proposal. There will also be a Creditors Meeting scheduled and the proposal will include the location as well as the date and time of this meeting.

The Creditors Meeting is chaired by a representative of the Insolvency Practitioner and you will have to attend the meeting so that you can answer any questions that might arise. You must have a 75% vote agreeing to the IVA to make it binding. Once it is approved it is a legal binding document for even those that did not vote in favor. It now protects you 100% to what the proposal outlines.

The final report is then sent to al the creditors and to yourself. Any modifications that were made during the meeting are included in this final document.

The Practitioner will oversee the arrangements and stay in charge throughout the time period. You will make one monthly payment into an account that is held by the Practitioner in your name. Once a year a review of your income and expenses will occur and be sent to all of your creditors. If you stick to your IVA agreement until the end of the term your debts will be wiped away.

AN IVA gives you protection against impatient creditors. IVA’s stay on the public register for 2 years after the date of completion of the arrangement. If 75% of your creditors do not agree with the arrangement they you will need to apply for bankruptcy.

Your Individual Voluntary Arrangement is more formal than a Debt Management Program but not as destructive as Bankruptcy. It’s a middle point that is often the right solution. In fact it is a very popular alternative throughout the UK.

Is an IVA the solution for you? Only you and your counselor can answer that but chances are the answer is yes. Don’t drown in your debt when there is a solution.