IVA FAQs

Below are listed some of the most frequently asked questions relating to the IVA debt solution and, for many people considering an IVA as a debt solution, this will be a good starting point.

Each brief answer, below, is followed by a 'Read More' link to a more expansive and detailed answer for those looking for more information.

What is an IVA?

Introduced as part of the 1986 Insolvency Act, an IVA, or Individual Voluntary Arrangement, is a formal debt solution designed to act as an alternative to bankruptcy.

It enables a person with a serious debt problem an opportunity to reach a legally binding agreement with their creditors that revolves around affordable payments being made for a fixed term, which is normally 5 years. Once all the payments have been made and the fixed term is successfully completed, all outstanding balances on the original debts are legally written-off.

Whilst the IVA is in force, creditors are legally obliged to stop charging any interest on the outstanding debts, cease adding late payment charges to the balances and refrain from taking legal action against the IVA applicant.

This ensures that once the IVA has successfully completed the applicant is completely debt free. Read more.

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What are the pros or advantages of an IVA?

Entering an IVA will enable you to reduce your monthly debt repayments for a fixed time period, after which any outstanding balances will be legally written-off by your creditors. You will then be free of all your unsecured debts.

It will provide you with legal protection from your creditors whilst allowing you to retain control over your financial affairs. An IVA will protect your assets, such as equity in your home, whilst allowing you to retain a degree of privacy over your personal circumstances. Read more.

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How much will my IVA repayments be?

The IVA repayments are set to what is agreed as being affordable to the applicant. Therefore, each IVA will have its own unique repayment which takes into account the personal circumstances of the individual concerned.

However, there is a minimum repayment threshold, imposed by creditors, below which creditors might reject the proposed IVA.

The minimum requirement ensures each IVA offers creditors a viable return in relation to the total debt owed but in simple terms, the more you owe, the more you'll be expected to repay.

The slider tool on the side of each page of My IVA Adviser uses a complex algorithm to calculate the minimum required repayment for any given debt level. Read more.

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Who pays for the IVA?

Set-Up Fees:
MY IVA Adviser do not charge any set-up or arrangement fees should you choose to apply for an IVA through us.

IVA Fees:
The creditors pay for the IVA administration costs by using some of the money they recover through the IVA.

The costs are detailed in the IVA proposal and creditors negotiate with the Insolvency Practitioner to restrict the amount they can charge for the work they do on the IVA case. Read more.

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How long does it take to set up an IVA?

Under normal circumstances an IVA will take 2 - 3 weeks to prepare and, once prepared, a further 2 weeks legal notice needs to be given to the creditors.

This ensures creditors have sufficient time to consider the IVA being proposed and decide whether they will accept or reject the IVA at the Creditors' Meeting. Read more.

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IVA or Debt Management Programme (DMP)?

This decision will be based on personal circumstances, and depending on what assets you have, whether or not you have a career you are trying to protect and your future earning potential.

Assessing this decision can be very difficult and complex and, whilst we can offer you guidance, ultimately, it will be your decision.

For help you should call My IVA Adviser on 0800 088 7503 for a free consultation, during which all the available solutions will be explored. Read more.

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How does an IVA work?

An IVA provides the chance to make a fresh financial start by structuring a new agreement between the IVA applicant and their creditors.

An IVA is a formal debt solution that acts as an alternative to bankruptcy and it protects assets and incomes that might otherwise be vulnerable through the bankruptcy process.

Payments into the new agreement are based on affordability and are set for a predetermined 'fixed' term. All remaining debts left unpaid at the end of the term are legally written off by the creditors, leaving the applicant debt free. Read more.

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How do joint IVAs work?

Joint IVAs offer two people, sharing a common financial budget, a chance to reach agreement with their creditors in much the same way as a 'single' IVA does.

Again, payments are based on affordability and set for a fixed repayment term, after which time all debt left unpaid by the IVA contributions is legally written off by the creditors. A joint IVA application can be made by any two people sharing a common financial statement and are not solely reserved for couples in a relationship. Read more.

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What is a Lump Sum IVA?

A 'Lump Sum' IVA is an IVA that begins and ends with a single payment that acts as a full and final settlement to your unsecured debts. It has all the benefits of a standard contribution based IVA, including a freeze to interest payments and a block on all creditor charges and late payment fees.

People who have access to 3rd party funds provided by a friend or family member, or those who own an asset that might be sold to generate the required level of funds, could consider a Lump Sum IVA as a preferable alternative to a standard contribution based version. Read more.

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What are the cons or disadvantages of an IVA?

By entering into an IVA you will undoubtedly damage your credit rating for a period of 6 years, commencing from the start date of your IVA. You will also be required to refrain from seeking any further credit agreements, such as loans, credit cards or store cards whilst your IVA is actually active.

During the term of your IVA you'll be expected to live within a modest financial budget and you'll be subjected to regular reviews each year to see if your IVA payments can be increased. If you fail to successfully complete you IVA, you will not benefit from any debt write-off and your creditors will be free to once again pursue you for the recovery of your debts. Read more.

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How to end an IVA early

There are many different scenarios that could enable you to consider bringing your IVA to an early completion.

Most options will relate to the introduction of funds, some of which might, under normal circumstances, be subject to your IVA's 'Windfall Clause'.

So you should, therefore, make yourself familiar with your obligations under the windfall clause before you make an approach to your Insolvency Practitioner as how you package your offer will be crucial. Read more.

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IVA not working

If your IVA is not working you must seek advice from an expert. Here at My IVA Adviser we help people with an IVA that is not working. Why your IVA is not Read more.

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Ask your own question

Are you struggling to find the answer to an IVA question that you have, or would you like to ask an IVA specialist a question relating to your personal circumstances?

If you would like to ask a question to an experienced IVA adviser, simply call 0800 088 7503 or, alternatively, complete this form and one of our advisers will call you back at your preferred time.

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