What is IVA debt advice? An Individual Voluntary Arrangement (IVA) is an agreement between you and your creditors whereby you make funds available for distribution between the creditors bound by the agreement. This usually involves making one monthly payment out of your income for a set period of time and, if you have any assets such as equity in your property, endowment policies etc you may have to make some of this available to creditors as well.
Can I apply for an IVA debt advice? If you are unable to pay your debts as they fall due you may apply for an IVA. This applies even if you have assets that, if sold, would cover your debts. If you are already subject to a Bankruptcy Order you may still apply. If the arrangement is approved, your Bankruptcy is annulled.
What are the benefits of IVA debt advice? - Interest and charges on your debts are frozen - Creditors stop ringing and writing to you - they contact the Supervisor of the IVA - An IVA gives you protection from creditors by way of a court order - Once your obligations under the IVA are fulfilled, your debts are then written off - You potentially avoid bankruptcy - Your credit rating is not as seriously affected as in bankruptcy - You can continue to trade
This means that your creditors accept a reduced offer of repayment to settle their debt. By entering into an IVA, your total debt repayments – including costs – can be reduced by up to 40-60%!
Payments are usually made over five years, after which the remainder of your debt is written off. During the repayment period, all interest and charges are frozen and you will receive no more correspondence from your creditors.
- All interest and charges on your account are frozen. - Your account is administered by a fully qualified, licensed insolvency practitioner, who takes responsibility for liaising with your creditors and distributing funds on your behalf. - We can perform a confidential review of your circumstances to see whether you are eligible. - A legal process for UK residents (excluding Scotland) with a significant debt problem. - On agreement your creditors accept a reduced offer of repayment in full and final settlement of the debt. - Payments are normally made over a 5 year period, following which the remainder of your debt is written off. - Debt write off applies only where an Individual Voluntary Arrangement is suitable, adhered to and at the end of 60 months. This relates to unsecured debts that were included with an IVA and does not include any secured debts, mortgages, HP or utility bills. Failure to adhere to an IVA can result in bankruptcy. An IVA will affect your credit rating for up to 72 months after the completion of your IVA. - A Fee payable – this is paid out of your month contributions to your IVA and will be notified to you in advance - Homeowners may be required to re-mortgage after 3 years. - Alternative solutions such as debt management may be offered.
An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors where you will come to an arrangement with people you owe money to, to make reduced payments towards the total amount of your debt in order to pay off a percentage of what you owe then generally after 5 years your debt is classed as settled.
IVA Pros: - Creditors who vote against your proposal are still bound by it. - Creditors whose lending is unsecured can't take any further action. - Interest is usually frozen as long as you kee pup your payments. - Your insolvency practitioner will help you prepare your proposal, including agreeing the level of your household and personal spending based on guidelines acceptable to creditors. - Many insolvency practitioners will allow you to pay their fees for preparing your proposal monthly, as part of the IVA. - You make only a single payment each month or quarter. Your insolvency practitioner is responsible for administering and distributing your payments. - The terms of an IVA will usually enable you or your spouse or partner or a relative to make arrangements to buy your share of the net worth of your home or to make extra payments, rather than the home having to be sold. This may be done through a remortgage or a loan. (Net worth means its value after any debts secured on it have been paid.) - On completion of the IVA, the balance of what you owe your creditors is written off. - You may be able to continue running any business you have.
IVA Cons: Your IVA is entered on a public register. - The insolvency practitioner may require payment in advance for preparing your proposal and getting your creditors' agreement. - If there is some equity (value) in your home after taking account of the mortgage(s) on it, you will probably have to pay for your share, usually in the fifth year of your IVA, by remortgaging the property. If you can't get a remortgage, you may have to continue making monthly or quarterly payments from your income, for up to another year. - If your circumstances change, and your practitioner can't get creditors to accept amended terms, the IVA is likely to fail. You will then still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your IVA. - If your IVA fails, you may be made bankrupt.
The Insolvency Act 1986 is an Act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK.
The Insolvency Act 1986 essentially governs issues relating to personal bankruptcy and Individual Voluntary Arrangements and all administrative orders relating to company insolvency.
The Insolvency Act 1986 is an important piece of legislation that cover the IVA procedure. An individual voluntary arrangement (IVA) is a legally-binding agreement that allows you to repay your creditors by making a reduced monthly payment at an amount you can afford. This usually lasts five or six years, and at the end of this time your remaining debt is written off. You make one affordable payment to us each month and we distribute it fairly amongst your creditors. During your IVA creditors are not allowed to contact you or increase your debt in any way.
The Contents of the Insolvency Act 1986 - Part I - Company Individual Voluntary Arrangements -Part II - Administration Orders - Part III - Receivership (ss 22-72H) - Chapter I - Receivers and Managers (England and Wales) - Chapter II - Receivers (Scotland) - Chapter III - Receivers Powers in Great Britain as a whole - Part IV - Winding Up of Companies Registered Under the Companies Acts (ss 73-219) - Chapter I - Preliminary - Chapter II - Voluntary Winding Up (Introductory and General) - Chapter III - Members Voluntary Winding Up (ss 91-96) - Chapter IV - Creditor' Voluntary Winding Up (ss 97-106) - Chapter V - Provisions Applying to both kinds of Winding up - Chapter VI - Winding Up by the Court (ss 117-162) - Chapter VII - Liquidators - Chapter VIII - Provisions of general application in winding up - Chapter IX - Dissolution of companies after winding up - Chapter X - Malpractice before and during Liquidation; Penalisation of companies and company officers; Investigations and prosecutions (ss 206-219) - Part V - Winding Up Unregistered Companies (ss 220-229) - Part VI - Miscellaneous Provisions applying to Companies which are Insolvent or in Liquidation - Part VII - Interpretation for first group of parts - Insolvency of Individuals - Bankruptcy - Part VIII - Individual Voluntary Arrangements IVA - Part IX - Bankruptcy (ss 264-371) - Chapter I - Bankruptcy Petitions - Bankruptcy Orders - Chapter II - Protection of Bankrupt's Estate and Investigation of his Affairs - Chapter III - Trustees in Bankruptcy - Chapter IV - Administration by Trustee - Chapter V - Effect of Bankruptcy on certain rights, transactions etc. - Chapter VI - Bankruptcy Offences - Chapter VII - Powers of Court in Bankruptcy - Part X - Individual Insolvency: General Provisions - Part XI - Interpretation for second group of parts -Miscellaneous matters - Part XII - Preferential debts in company and individual insolvency - Part XIII - Insolvency Practitioners and their qualifications (ss 338-398) - Part XIV - Public Administration (ss 399-410) - Part XV - Subordinate Legislation - Part XVI - Provisions against debt avoidance (England and Wales Only) - Part XVII - Miscellaneous and General - Part XVIII - Interpretation - Part XIX - Final Provisions - Schedules - Schedule B1, on the new administration procedure after the Enterprise Act 2002
An IVA lasts 5 years or more. An IVA will typically last for 5 years, which may be extended or failed at any time by the supervisor if the circumstances arise. This could mean you facing the possibility of bankruptcy some years down the road after the IVA has been put into place.
That is why it is important to be absolutely sure that an IVA is suitable and can be completed with confidence. A lot can happen in five years, such as job loss.
How long does an iva last? In some circumstances, if you are able to offer your creditors a lump sum in settlement of your debts, an IVA can last for less than 5 years. This can either be via a windfall, third party assistance or more commonly by sale or remortgage of a property.
Full and Final Settlement IVAs are where a lump sum is offered to creditors in settlement of a debt upfront. These tend to last no more than three months.
An IVA can last longer than five years if you need to make up for missed or reduced payments or if your proposal states that the IVA must be extended if you are unable to release any equity at the end of the fifth year.