Individual Voluntary Arrangement (IVA)

There are likely to be other options to consider such as Debt Management,  Bankruptcy,  Debt Relief Order, Debt Consolidation through refinancing,

If it has been agreed that an IVA is the most suitable solution for you, your circumstances and proposed repayments are detailed in a document called  a proposal. The proposals set out in detail the following:-

• Your background information and how your situation arose
• Your assets including your residential property, cars, etc
• Your secured Debts (mortgage, secured loans, Higher Purchase)
• Your unsecured debts (credit cards, loans, tax debts, etc)
• Your proposals to creditors. For example, 60 monthly contributions of an affordable sum.
• How your IVA is to be supervised and your obligations
• What happens if you cannot keep to the terms
• The fees to be charged
• How much creditors are likely to be paid

If your assets are at risk because of action taken by creditors, we can if necessary, apply to court for an Interim Order. This means that creditors cannot commence or continue with any action against you and your assets unless the court permits them to do so. There would be an additional cost applicable to your case if an interim order is appropriate.

A virtual meeting is then held with your creditors where they are able to vote on whether to accept, alter or reject your proposals – 75% of creditors that vote at the meeting must agree to the proposal in order for the IVA to go-ahead. As long as your proposal demonstrates a genuine desire to repay as much of your debt as you can afford, it is likely that creditors will accept your IVA. It is our role to advise you on what creditors will find acceptable. If there are any issues we believe would cause creditors not to approve the arrangement, then this will be discussed with you.

Once your IVA is approved all interest and charges on your unsecured debts included in the IVA are frozen. If creditors accept that you can only repay a proportion of your remaining debt, the balance of your remaining debt included in the IVA will be written off as long as you keep to the terms of your agreement. 

You may also wish to visit our Debt Calculator page to assess your current financial situation.

Important Information

All debt solutions should be very carefully considered. Our team will provide you with the most appropriate advice taking into account your circumstances. There are a range of options which include IVA, Debt Management, Bankruptcy, Debt Relief Order, Debt Consolidation through refinancing and Dealing Direct with your Creditors all of which are covered on this site.

The Debt Advisor Ltd is authorised and regulated by The Financial Conduct Authority. This means we are able to offer debt advice and deliver both formal and informal debt solutions. We are a commercial organisation and if you choose a solution we provide, fees will apply in relation to the service we provide. Fees vary dependent upon solution and will be discussed with you.

Retained payment or missed payments will result in your accounts with creditors falling into arrears. Distributions to creditors will commence once your Nominee’s fee and reasonable disbursements have been
paid in full.

You have the right to a cooling-off period of 14 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term. Calls to our free phone number from mobile phones and other networks may be charged.

We hope that the information and debt advice on this site including Frequently Asked Questions, will help inform you.

A full and final settlement IVA is a legally binding arrangement with your creditors that allows you to repay a proportion of your debt using a one-off lump sum payment.

Normally the lump sum is raised by remortgaging your property or introducing a lump sum from relatives. For individuals over retirement age, an equity release scheme may be possible although we would recommend you only consider Equity Release Schemes after taking advice from FCA regulated mortgage advisor.

Full and Final Settlement IVA Example

Anthony had amassed £76,586 of debt having gone through a tough divorce. He had been made redundant from a well-paid job and after settling his solicitors’ costs, he had £11,000 remaining. Anthony was looking to set up as a business consultant and at the time his income was erratic.

The TDA team helped put together an IVA proposal which offered £11,000 to settle his debts. Anthony also agreed that if he was entitled to any compensation from mis-sold PPI this would also come into the IVA.

This solution may be appropriate for individuals who are able to raise a sum of money, but after providing for their reasonable costs of living including their increased mortgage payment, do not have any surplus income. 

Creditors may accept your full and final settlement if we can demonstrate that this offers a better return than bankruptcy. 

The process is much the same as for a normal IVA but the term is usually lower, for example 12 months. See the IVA Process section of our website.

Effect on your credit Rating

An IVA will be on your credit record for six years which is the same length of time that any other adverse credit is recorded. The IVA will also be added to the Insolvency register which is a public register. See the list of risks and benefits above or click here.

The next step

All debt solutions should be very carefully considered. Our team will provide you with the most appropriate advice taking into account your circumstances. There are a range of options which include IVA, Debt Management, Bankruptcy, Debt Relief Order, and debt consolidation, all of which are covered on this site.

Important Information

All debt solutions should be very carefully considered. Fees will be charged if a solution is taken in order for us to set up your plan and maintain it – all fees will be outlined during your consultation. For further information on fees, please see the FAQ section of the different solutions available. Retained payment may place you further into arrears. You have the right to a cooling off period of 14 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term. Calls to our free phone number from mobile phones and other networks may be charged.

Is an IVA suitable for me?

An IVA could be appropriate for you if you are struggling to make the monthly payments that creditors expect. The most compelling benefit of an IVA is that you pay monthly affordable payments for a 5 or 6 year period with the unpaid balance being written off when the IVA is successfully completed. The starting point for working out whether an IVA is appropriate is working out an “affordable” monthly payment would be and also how much you owe to your unsecured creditors.

Examples of unsecured creditors whose debt can be included in an IVA are:

• Credit cards and loans
• Debts owed by you and someone else “jointly owed”
• Monies owed to individuals including friends and family
• Debts due to HMR & C including overpaid benefits, self assessment tax, VAT
  Arrears of council tax and utilities
• Trade creditors who supply you if you trade as self-employed
• Shortfall once a property has been repossessed

Debts that cannot be included in an IVA include:

• Matrimonial debt – monies owed to an ex-husband or wife that a court has decided should be paid
• Student debt
• Court fines or fines for traffic violations

Our debt calculator will help you work out how your “affordable” monthly payment compares with the amount creditors want.

For full debt advice and whether an IVA would be your best option, you can also speak to one of our advisors.

Can an IVA stop action by creditors?

Yes but it depends on the action and how far it is has gone. We can apply for an “interim order” which prevents creditors from starting or continuing action against you. This includes writs, judgments, charging orders, liability orders and petitions for bankruptcy. It is vital if you are facing action to get in touch immediately. If you leave it too late, we might not have enough time to help you obtain an interim order before the debt becomes charged on your property or you end up bankrupt.

If you are made bankrupt and you have assets that are risk of being sold by your Trustee in Bankruptcy, it is possible to propose an IVA and if this is agreed by your creditors, your bankruptcy can be canceled. You will need specialist debt advice on whether this is possible.

IVA’s – The benefits and the risks

Finding the right solution is only possible if a clear picture is available of the short term and long term advantages and disadvantages of an Individual Voluntary Arrangement. An IVA is aimed at getting your unsecured debts paid off in a manner that is affordable but it is a formal and legally binding solution. An IVA is not easy and requires discipline. The Advantages and Disadvantages explained below can help you decide if an IVA is right for you.

The protocol aimed to simplify the IVA process, but particularly to help make the process as fair as possible for both consumers and creditors.

The protocol terms and standard conditions are reviewed by an independent committee, The IVA Standing Committee who ensure that Protocol Compliant IVA’s remain fair and workable.

The Debt Advisor uses the Protocol terms for consumer IVA’s. We also use protocol terms for IVA’s for self-employed however, generally, these IVA’s are not protocol compliant. See the protocol here.

Guidance to support the IVA protocol

To view the R3 standard Terms and Conditions, please click here.

IVA Resources

• Creditors guide to Insolvency Practitioners fees
• Is a voluntary arrangement right for me?
• Requisite majorities for voting purposes at the creditors meeting
• IVA Protocol