An IVA can freeze your debts and allow you to pay them back over a set period. Debt still owed after this period is written off.
An Individual Voluntary Arrangement (“IVA”) is a legal procedure for residents of England, Wales and Northern Ireland, that allows you to make agreement with your unsecured creditors over a period of time (usually five years). It is administered by a ‘Supervisor’ who must be a licensed Insolvency Practitioner (“IP”). It is an alternative to bankruptcy.
Once you enter an IVA, creditors can take no action against you and should not contact you. Your creditors are bound into the IVA and should communicate only with the Supervisor.
In most cases an IVA will require you to pay a single monthly payment for five years. This payment is calculated only after taking account your income and expenditure and should therefore be affordable to you.
However, an IVA will affect your credit rating for six years and your information will also be placed on the public Register of Insolvencies for the duration of the IVA and removed after three months from its completion.
During the course of IVA all interest and fees associated with your debts are frozen.
At the end of the IVA the remaining unsecured debts are written off and you can begin your debt-free future. and at the end of that period any unsecured debts* are written off, provided the IVA is successfully completed. (*see ‘Debts I can write off’ below).
An IVA can be a positive way to manage your debts. There are specific criteria to enter into an IVA other than you have debts and you are able to pay your debts as an when they fall due. But at FKI we do suggest the following criteria:
Most unsecured debts, meaning debts that are not ’secured’ (tied to an asset such as your home or car), can be included in an IVA. This includes:
These include Secured debts (loans tied to specific assets) and debts specified under law:
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