Debt Control Centre

IVA stands for Individual Voluntary Arrangement.

An IVA is an official debt repayment plan that in most cases includes the freezing of interest, reduction in the total amount of debt owing, and legal protection from creditors as long as the terms of the IVA are adhered to.

Payments are normally made over a 5 year period, following which the remainder of your debt (up to 60%) is written off. You must have a minimum debt of £15,000 to apply.

An Individual Voluntary Arrangement ( IVA ) is an agreement with your creditors to make a single reduced payment each month. This lasts for an agreed period of time (less than 5 years).

Once agreed, creditors are not allowed to add interest or charges to your accounts by law. The agreement is fixed meaning that creditors cannot randomly demand changes to it.

  

• All interest and charges on your unsecured debts will be frozen.
• Individual Voluntary Arrangements are not published in local newspapers, unlike bankruptcy.
• It will not affect professions such as the Police Force and Armed Forces, neither will it affect your ability to hold public office or act as a company director.
• All unsecured creditors will be bound by the IVA.
• The debtor, via the insolvency practitioner, is involved in the choice of assets made available to the creditors since the arrangement is designed to suit the debtor's situation.
• Your contributions are based on your ability to pay.
• Administration costs should be lower than bankruptcy, enabling higher payments for creditors.
• The debtor is able to operate a normal current account, as long as it does not have an overdraft facility.
• Once the individual voluntary arrangement is successfully completed your debts are effectively written off, providing you with a fresh start.

• Usually only suitable if the debtor has unsecured debts of at least £12,000.
• To gain approval, creditors representing at least 75% of the value of the money owed, as well as a simple majority, must agree to the proposed arrangement.
• You will be required to stick to a budget for the term of the arrangement (usually five years).
• All assets and liabilities must be declared, if you own assets of excessive value, the creditors can ask that they be released for the benefit of the creditors. Any windfalls, inheritance or bonuses must be declared to the Supervisor of the arrangement.
• All IVAs are recorded in a public register and will appear on your credit file. This could affect any future applications for credit.
• In some cases it may be necessary to release some of the equity from your property in the 4th year of the arrangement.