IVA's (Individual Voluntary Agreement)
An IVA (Individual Voluntary Arrangement) is where you come to an arrangement with all of your creditors about how to pay off your debts, which is enforceable by the Insolvency Act of 1986.
The IVA is usually prepared under the supervision of a licensed Insolvency Practitioner and, once in place, it has the force of law. The good thing about an IVA is that it stops your creditors from harassing you and it enables you to have a great deal more control over your assets and how they are dealt with than you would by declaring yourself bankrupt.
If you find that you are heavily in debt and cannot meet your repayments to creditors then an IVA may be the best plan of action for you.
Key Features Of An IVA:
- One affordable monthly payment – for five years
- The interest on your accounts is frozen immediately
- The unpaid balance of your debts is written off
- Protects you from further action by your creditors
- Your creditors are legally bound by the terms of the agreement
- No uncertainty: you know how much you pay and for how long
- Can be used to prevent bankruptcy proceedings against you
- Real alternative to declaring yourself bankrupt
- No public notices: an IVA is between you and your creditors
We work with a panel of Licensed Insolvency Practitioners who will act on your behalf with all correspondence from your creditors. The insolvency practitioner, with your help, will then produce a written proposal. This will then be sent to your creditors in accordance to a pre-determined creditors meeting, usually held at the Insolvency Practitioners offices in the absence of both yourself and the creditor.
The IVA Proposal
The IVA proposal will include details of your income and expenditure, a list of your creditors names and addresses, amounts due to your creditors and a detailed history of your credit problems, including your past and present circumstances. Your IVA proposal will include a statement of affairs; this will provide you with what you are looking to offer your creditors and over what time period. As soon as your proposal has been finalised your Insolvency Practitioner, may apply to your local County Court for an Interim Order. This will provide you with valuable protection against CCJ’s, Attachment Orders and even Bankruptcy Orders.
All of your un-secured creditors will be bound by the IVA, provided that more than 75% (by volume) of the unsecured creditors agree to the proposal. As soon as your proposal has been approved all interest will stop on the debt that you owe.
After the creditors meeting, your Insolvency Practitioner will take on the role of supervisor of the IVA. Your Insolvency Practitioner will review your income and expenditure on a regular basis, so that any change in your circumstances can be reported to your creditors. Similarly if you report to your Insolvency Practitioner a change in circumstances, for example a job loss or a reduction of income then your supervisor will be sympathetic and will be able to advise you on any action to be taken.
Your creditors are bound by the IVA and must not hassle you in any way outside of your IVA. Your creditors cannot petition for your bankruptcy in relation to your debts included in your agreement. However, if you default on making payments in accordance with the agreement, your Insolvency Practitioner is obliged to petition for your bankruptcy. So, if your debts are serious enough to go the IVA route, you need to follow it through properly.
How will an IVA affect your credit rating?
IVA’s have a significant effect on a credit record. Even when you have completed on your IVA you may also need to declare this fact on mortgage/credit applications for many years after an IVA was completed even if it is no longer visible on a credit record. Like all debt solutions there are significant advantages and disadvantages that go along with using an IVA to resolve debt concern and it is important for you to be aware of same.
What fees are involved?
There are two sets of fees which are charged for an IVA: the Nominee’s fee and the Supervisor’s fee. The Nominee’s fee covers the set-up costs of an IVA (typically equivalent to first 5 contributions), with the initial monthly payments go towards paying the Nominee’s fee. Creditor will begin to receive payments once the nominee’s and any necessary outlays have been recovered. The Supervisor’s fee is generally calculated as percentage (usually 15%) of each monthly payment made (once the nominee’s fee has been paid). This covers the ongoing service from your IP (Insolvency Practitioner).
The Nominee’s and Supervisor’s fees are deducted from money you pay into your IVA and the creditors share the balance. The level of these fees are determined by the creditors at the Meeting of Creditors
The IVA procedure – Ten short steps outlining the procedure of an IVA from start to finish.
Please find links to below to websites which contain more information about a range of debt related issues.
Citizens Advice Bureau – Free advice on a number of various issues including assistance with your debts.
The Insolvency Service -Regulators of the UK insolvency profession. Provides information about Bankruptcy, IVAs and DROs and allows completion of court forms online.
Financial Ombudsman Service – the independent service for settling disputes between businesses providing financial services and their customers.