IVA's - Helpful Advice on Individual Voluntary Arrangements

What is an IVA?

The Individual Voluntary Arrangement was introduced by the Conservative Government in 1986 (Northern Ireland 1989). Although developed as an alternative to bankruptcy for debt laden businesses and self-employed traders it is now more commonly used by individuals who have amassed considerable levels of unsecured debt.

An IVA is a completely legally binding process governed by The Insolvency Act 1986 and it must be set up by an Insolvency Practitioner who negotiates and deals with the creditors on behalf of the debtor.

The general principle is that if over a set period of time, usually 60 months, the debtor makes an agreed monthly payment, then any outstanding debt at the end of the term is written off. That said, every IVA will be unique as it is wholly dependent on each individual's circumstances i.e. employment status, income, necessary ongoing expenditure, number of creditors and amount of unsecured debt. The proposed arrangement must be acceptable to more than 75% of the creditors.

Advantages that may be derived from entering into an IVA

• Stigma of bankruptcy is avoided.
• IVA is not reported in local newspapers.
• All interest is frozen.
• 1 fixed monthly payment / sometimes an agreed one-off payment. The total paid is less than the sum owed.
• Debt free after 60 months as long as client complies with IVA.
• No up front fees.
• Legally binding process (for all parties).
• Protection from further action by creditors as long as client complies with IVA.
• An IVA may help to safeguard property - inaction or further borrowing that is not affordable may result in mortgage arrears / repossession.

Criteria to be met to enable an IVA

• You have unsecured debts totalling more than £15,000
• You have more than 3 creditors
• You have debts that are more than 1 year old
• You have surplus income each month (excluding creditor payments)

Implications of entering into an IVA
Although less onerous than entering into formal bankruptcy, whilst the IVA is in force the number of mortgage lenders willing to lend is severely restricted. On satisfactory completion of the IVA it is possible to obtain mortgage funding, primarily from the adverse / sub prime lenders.

IVA Arrangers - take a little time to consider..... 

At Mortgage of Choice we take pride in our ethos for fair and transparent advice on mortgages and protective insurances. In specialist fields where we are not qualified to advise, this ethos will be maintained by only referring our customers to practitioners who are fully qualified, well established and totally ethical.

Can we help guide you to a way out of worrying debt?

0800 988 1889   enquiries@mortgageofchoice.co.uk