IVA : The Debt Help Solution Explained

So are Individual Voluntary Arrangements (IVAs) the perfect debt solution?

To be able to answer that question clearly the first thing to do is to learn more about IVA debt solutions and go from there.

At My IVA Adviser, we try to make sure that each aspect of the IVA debt help solution is explained clearly and without jargon, so as to make this learning process as easy as possible.

An Individual Voluntary Arrangement or IVA as it is generally referred to, is a formal debt solution that allows someone with substantial unsecured debts, who is unable to afford their monthly repayments, reach a new arrangement with their creditors. An IVA will normally consist of 60 monthly repayments, calculated by what the IVA applicant can actually afford after all their general living costs have been taken into account, and this new payment will replace the original agreed monthly payments on all the original debts.

Every IVA debt solution must be arranged through an Insolvency Practitioner. Their role is to prepare all the necessary paperwork and liaise with the creditors on behalf of the IVA applicant.

The Insolvency Practitioner will convene a creditors meeting, during which the IVA applicant’s circumstances will be explained to their creditors and approval for the IVA will be sought.

Generally speaking, it is the Insolvency Practitioner who represents the IVA applicant at the beginning of the IVA process that continues to act as the IVA Supervisor for the full term of the IVA, which is normally 60 months.

Once agreed, the IVA debt solution offers several benefits to both the creditors and the IVA applicant.

The advantages for the IVA applicant whilst they are in an IVA are…

The required monthly repayments are set at an affordable level for the IVA applicant, allowing them to continue with their life without the burden of their debts.
The agreement will not last more than 5 years.
If all the original debt is not repaid within this 5 year period, the creditors are obliged to write-off the remainder.
The agreement is private, and although it is recorded on the IVA register and the credit register, it is not published in the press.
The agreement is private and the IVA applicant’s employers will not be notified.
The Individual Voluntary Arrangement (IVA) solution is available to IVA applicant’s whose occupation would restrict them from going Bankrupt
A creditor cannot take legal action against the IVA applicant, once the IVA has started.
A creditor cannot contact the IVA applicant at all during the IVA.
A creditor cannot request changes to the agreed monthly repayments.
A IVA applicant’s home is not at risk to the creditors.
An IVA allows the IVA applicant an alternative to Bankruptcy.
The IVA applicant does not suffer the stigma that surrounds Bankruptcy.

And the disadvantages of an Individual Voluntary Arrangement (IVA) to an IVA applicant are:

If an IVA applicant continually fails to make regular Individual Voluntary Arrangement (IVA) repayments, the creditors have the option of making him Bankrupt.
The IVA applicant’s credit rating will be affected for up to 6 years from the beginning of the Individual Voluntary Arrangement (IVA)
An IVA applicant is not allowed to obtain any credit whilst in an Individual Voluntary Arrangement (IVA).
An IVA applicant will have to have their finances monitored, via an annual review, by the Insolvency Practitioner throughout the Individual Voluntary Arrangement (IVA) agreement.

For the creditors, the advantages of an Individual Voluntary Arrangement (IVA) are not so numerous, but in essence still make financial sense.

The IVA applicant commits to repayments, where no recent repayments may have been made.
The IVA applicant will pay all his creditors without preferences, each creditor will receive a pro rata return for the debt owed to them.
The creditors keep the ability to petition for a IVA applicant’s Bankruptcy, should he fail to continue making repayments.
The creditors can look forward to receiving a higher repayment dividend for the debts they are owed, compared to the IVA applicant’s bankruptcy dividend.

So, over all, both parties are able to move forward with confidence.

As to whether an Individual Voluntary Arrangement (IVA) is a more suitable debt solution than bankruptcy depends on the personal circumstances of each different case, but that’s another subject!

If you would like more information about what is an IVA, click here or perhaps take a look at our ‘Debt Calculator.’

If you would like any aspect of the IVA debt help solution explained to you, why not call one of our IVA advisers today.

Or if you would like to call and discuss your personal circumstances regarding IVA’s, or any of other debt solutions, you’re are welcome. Just call My IVA Adviser on 0800 088 7503 for a private chat with a debt solutions specialist.

You will be given free, clear, concise and ethical debt advice. We specialise in helping people find the best debt solution available to them by explaining each debt solutions pros and cons.

All your details will remain confidential, and our small, specialist team will help you find the debt solution for you.