Individual Voluntary Arrangements (IVA’s)

IVA’s may be appropriate for anyone with a regular income who has perhaps overborrowed or overcommitted and is seeking an alternative to bankruptcy. An Individual Voluntary Arrangement (IVA), is a formally arranged credit agreement between you and your creditors which allows you to make reduced payments against the total amount you owe. It is a legally binding arrangement supervised by a Licensed Insolvency Practitioner.

The purpose of an IVA is to assist you in reaching a compromise with your creditors usually in order to prevent the consequences of bankruptcy. It will enable you to reduce your debts to a level that you can afford, and then clear them over a fixed period, usually 5 years. The single, affordable monthly IVA repayment is based on your disposable income and budget.

During the period of the IVA, your creditors must freeze any interest on the debts, and they are not allowed to pursue the debt, or instigate any legal action to recover it.

Your creditors will agree to pay your Insolvency Practitioner a fee for managing the IVA. If you complete your IVA as agreed then you will pay no more than your scheduled monthly installments. However, if your IVA fails before completion then any outstanding fees to your Insolvency Practitioner will be taken from the amounts you have already paid and will not go towards reducing your debt. It’s also important to bear in mind that if you receive any windfall during your IVA (such as an inheritance, lottery win or if the equity in your house rising sharply) you may be required to pay off your debts in full.

At the end of the IVA, assuming all the requirements of the IVA have been satisfactorily met, all of the debts are cleared and effectively written off.

It should be noted that you can cancel your proposed IVA without charge at any point before your proposal is sent to creditors. After this time you can still cancel but we reserve the right to charge an administration fee which is representative of the work we have put in.

IVA advantages

• All interest and charges on your unsecured debts will be frozen.
• Your are protected from any tfurther court action by your creditors, providing you keep to the terms of the arrangement.
• Your creditors will not be allowed to send you letters or telephone you.
• All your unsecured credtiors will be bound by the IVA.
• Your payments are based on what you can afford to pay.
• Individual Voluntary Arrangements are not published in the local papaers, unlike bankruptcy
• It will not affect professions such as the Police Force or Armed Forces, neither wil it impact on your ability to hold public office or act as a company director.

IVA disadvantages

• You will be required to stick to a budget for the term of the arrangement (usually five years).
• All assets and liabilities must be declare: If you own assets of excessive value, the creditors can ask for these to be sold.
• You will be asked to release some of the equity on your property towards the last six months of the arrangement.
• Any windfalls, inheritances or bonuses must be declared.
• All Individual Voluntary Arrangements are recorded on a public register and are likely to appear on your credit file.
• If an IVA fails, then there is a risk that either the creditors or the Insolvency Practitioner will petition for your Bankruptcy.
• 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.

For further information, complete the contact form on the right.

NTF Financial Solutions Ltd. are the Insolvency Practitioners that will process and supervise your IVA. The insolvency service has produced a guide for people who are struggling with debt, which outlines each of the available solutions. For further information click here or complete the contact form on the right.