Individual Voluntary Arrangements (IVAs) In The UK

by Thomas Vargo

An IVA or otherwise known as a individual voluntary arrangement is an agreement between your creditors and you to pay part or all of your debts. You make regular payments to an authorized debt specialist called an insolvency practitioner (IP). They divide this money between your creditors as agreed in your Individual Voluntary Arrangement.

There is no minimum or maximum level of debt and no minimum or maximum level of repayments, except what is acceptable to your creditors. When the agreed amount has been repaid, your Individual Voluntary Arrangement usually ends.

Pros And Cons Of Involuntary Arrangements - UK

Pros of a an IVA are as follows:

1) The insolvency practitioner can help you work out how much you can afford to repay.

2) The insolvency practitioner will contact all your creditors and get them to agree to your IVA for you.

3) Your creditors will not be able to take any action against you such as making you bankrupt or taking you to court.

4) Charges and interest are usually stopped from accumulating.

5) While your Individual Voluntary Arrangement is being set up, your insolvency practitioner might be able to get the court to issue an order preventing your creditors from taking further action against you.

Cons of an IVA are as follows:

1) Your Involuntary Arrangement will be listed on the Individual Insolvency Register, which is a online database used by credit reference agencies to update your credit rating.

2) It will make it harder for you to open new bank accounts, obtain loans and credit cards.

How to apply for Involuntary Arrangements - UK

Only a insolvency practitioner can set up a Individual Voluntary Arrangement and you must prove to them that you can afford to make the new payments. There are five steps that you have to follow to get approved for a IVA which we have listed below.

1) Contact a independent and free debt advice organization to make sure the IVA is right for you.

2) Get an authorized insolvency practitioner to act as your Involuntary Arrangements nominee. This means they will help you prepare your IVA and send it to your creditors.

3) If the IP agrees to act as your nominee, they will help you prepare your IVA. You will have to provide details about:

a) income and assets which can be used to pay your debts
b) your expenses such as food and household bills
c) your debts such as how much you owe including any charges or interest
d) you must provide a full list of your creditors, any one left out can apply to the court to have your IVA canceled

4) The insolvency practitioner will arrange a meeting with your creditors to accept your Involuntary Arrangement. You do not have to attend this meeting because the IP will represent you. Creditors who hold more than seventy-five percent of your debts must agree to it, for your IVA to be accepted,. The IVA will then apply to all your creditors, even those who objected to it.

5) If your Individual Voluntary Arrangement is accepted, the insolvency practitioner will act as your IVA supervisor. This means they will manage your payments to your creditors, distributing them as agreed.

Please Note: Your creditors can cancel your IVA if you don't keep up your monthly payments. Your creditors can take further action against you if your Involuntary Arrangement is cancelled. This can include making you bankrupt or taking you to court. Let your IP know if your financial situation gets worse such as if you lose your job because they may be able to get your creditors to agree to lower your monthly payment.