Individual Voluntary Arrangement

An IVA, or Individual Voluntary Arrangement, should not be confused with a Debt Management Programme (D.M.P.) which takes a more informal, and therefore less conclusive approach offering creditors payment in full, over whatever length of time it takes to clear the debts.

It is surprising how few people in debt actually know that the option of an Individual Voluntary Arrangement (IVA) even exists, hopefully the following notes will explain the process.

Most IVAs involve one affordable repayment per month, over a period of 60 months (five years). Your monthly repayment will be based on the amount you can afford after your normal cost of living has been deducted from your income and all your assets and liabilities have been taken into account, therefore reducing the risk of your IVA repayments pushing you into arrears and forcing you to miss payments on your mortgage or rent, car finance, utility bills or council tax. Less often, debts can be paid by using a, one-off payment known as a ‘Full and Final Settlement’ or ‘Lump Sum’ Individual Voluntary Arrangement (IVA).

An IVA proposal has to be drafted by a licensed Insolvency Practitioner (IP), which is then approved by you. A copy of the proposal will then be sent to your all of your creditors, and a creditors meeting arranged. The IP will chair the meeting, in which creditors vote on whether to accept or reject your IVA proposal, or to accept it with modifications made with your consent. The voting will often take place by fax or by post, and you will not normally be required to attend the meeting. If more than 75% in debt value terms of the creditors creditors that actually choose to accept the proposal, the IVA is agreed and becomes legally binding for all parties, whether they voted or not.

When you have successfully completed your Individual Voluntary Arrangement (IVA), you will be considered debt free, even if you haven’t repaid all of your debts in full. Any outstanding balances will be written off, leaving you free to make a fresh financial start.

Call free on 0800 088 7505 to find out more or get help with applying for an Individual Voluntary Arrangement (IVA). Alternatively you can read the Individual Voluntary Arrangement (IVA) FAQ's.