Definition of an IVA
The ultimate IVA definition is quite simply…… Individual Voluntary Arrangement.
An IVA, or individual Voluntary Arrangement to give it its full name, is a formal debt solution, designed to assist people with overburdening debt problems.
An IVA defines the structure of a new agreement between the IVA applicant and their creditors. It also acts as an alternative to bankruptcy for those people whose incomes or assets might otherwise be vulnerable under bankruptcy's terms and conditions.
IVA Qualifying Criteria
An IVA can only be administered by a licensed Insolvency Practitioner. To qualify, an applicant must have unsecured debts of at least £10,000 owed to 2 creditors, they must live in England, Wales or Northern Ireland and they must also be able to afford the minimum IVA payments related to the level of debt they have.
All IVAs have a defined predetermined term, which is usually 5 years although, in the correct circumstances, there could be just a single payment as part of a full and final settlement IVA.
For the complete duration of the IVA, the applicant agrees to make monthly payments to creditors based on affordability. At the end of the IVA, the applicant is considered debt free even if they have not actually managed to repay their full outstanding debt.
This is because any amount left outstanding after the successful completion of the IVA must be written-off by the creditors under the terms of the IVA.
An IVA also has the power to protect assets. This defines the IVA as being significantly beneficial when compared to bankruptcy, which forcibly surrenders assets to the Official Receiver.
For example, vehicles with a value greater than £2,000 will be of interest to the Official Receiver under the terms and conditions of bankruptcy but would be protected under the terms of an IVA.
Once an IVA has been agreed by the necessary percentage of creditors, the IVA becomes legally binding on all of them, which means the terms of the IVA are legally protected. Creditors are not allowed to try to change the terms of the IVA should they want to.
The terms of the IVA also requires a creditor to cease charging interest on all the debts in the IVA and they must also stop adding late payment charges or fines to the balances either.
There are several standard terms that are included within the IVA proposal, one of which stops creditors from contacting the client once the arrangement has begun.
These are the key points within the IVA definition that highlight the advantages of an IVA from the point of view of the applicant.
However, there are also disadvantages with an IVA and it is important to full understand how these will affect the debtor before entering into an IVA.
The team behind My IVA Adviser are IVA specialists. We are professional debt advisers that have the experience you'll need to help you become debt free.
We offer you the perfect opportunity to fully explore the IVA option in complete confidence through a private telephone consultation. To arrange an IVA consultation please call 0800 088 7503.
Or, alternatively, complete this form and one of our advisers will contact you at your preferred time.