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IVA - Individual Voluntary Arrangement

An IVA or Individual Voluntary Arrangement is a formal agreement reached between you and your creditors so that you are able to make affordable monthly payments over an extended period of time, normally five years.

An IVA (Individual Voluntary Arrangement), unlike some other debt solutions, is legally binding meaning that once it is in place, your creditors cannot take further action or contact you for repayment. Given the fact that an IVA is a formal process, it has to be set up by a licensed Insolvency Practitioner (IP).

Eligibility criteria for an IVA

To qualify for an IVA you must be able to fulfil the following conditions:

You owe more than £12,000 in unsecured debt.
Your debt must be spread over three or more creditors.
You have regular monthly income to pay your instalments.
You should have a disposable income (amount left after deducting bills and household expenses) of at least £200 per month.
You must be a resident in England, Wales or Northern Ireland. If you live in Scotland please refer to the Scottish equivalent of an IVA - Protected Trust Deeds.

How an IVA works?

How does an IVA work?

As part of the Individual Voluntary Arrangement (IVA) process, the Insolvency Practitioner (IP) will study your finances, debt, arrears etc., and accordingly, draft a proposal for your creditors.
Once you approve the proposal, an application will be made in the court for an Interim Order during which period your creditors cannot take legal action against you.
The IP will then request a meeting with your creditors.
In the meeting, the IP would put forward the proposal and negotiate with the creditors. This will include reducing your monthly payments to a more affordable level so that you are able to pay off your debt over a five year period.
A vote on the arrangement will take place.
If creditors representing 75% of the debt vote in its favour, the IVA will become applicable.
An IVA (Individual Voluntary Arrangement) once in place, is legally binding and as long as you honour the agreement, your creditors cannot approach you or take further action against you in court.
When an IVA (Individual Voluntary Arrangement) is accepted, the role of the IP becomes that of a supervisor who ensures that the terms of the arrangement are properly adhered to by you and your creditors.

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