IVA's
Individual Voluntary Arrangement
An individual voluntary arrangement (sometimes known as an individual voluntary agreement) is a legally binding arrangement whereby you agree to pay back to your creditors as much as you can possibly afford. This method is considered for those people that have incurred debts mounting above £15,000.
- One affordable monthly payment.
- Provides a method of resolving your debt problems.
- Is a legal agreement where your creditors accept the negotiated terms
- Can write off a percentage of your debt
Action Today offer a comprehensive service where we appoint an Insolvency Practitioner (who is a specialised accountant) to forge a legally binding agreement to ensure that you can pay an affordable percentage of your outstanding debts to your creditors. The actual percent that is agreed is dependable on the amount that is owed to your creditors and may be different for each of them.
Individual voluntary arrangements usually last for a period of five years. Providing you maintain the individual voluntary arrangement any balance of your debt outstanding after the five years is usually written off.
Advantages of an IVA (Individual Voluntary Arrangement)
- One affordable payment per month
- Creditors are bound by law. The IVA will overturn any CCJs
- From the date of approval, all interest and charges are frozen
- This is a private agreement between you and your creditors
- Your employer will NOT be made aware
- You can still re-mortgage your home when in the agreement
- You and your partner can enter a joint IVA if some debts are in joint names
- We offer a home visit after giving advice over the phone
- No Fees to pay. Insolvency Fees are payable from creditor contributions
- We have the experience and systems in place to make the process as painless as possible for you
- We are not a call centre. You will have one point of contact "pre" and "post" the IVA
- Enables a Sole Trader or Partner to continue to trade and generate income towards repayment to creditors which would otherwise have a call upon the personal assets of the individual.
Disadvantages of an IVA (Individual Voluntary Arrangement)
- An IVA will affect your credit rating
- Your IVA will be held on the individual insolvency register, which is available to view by the public
- You are not allowed to obtain further credit during the IVA term
- You usually need to have a disposable income of more than £120
- The IVA will require 75% of your creditors to agree to the IVA
- Fees for the IVA are high (typically £4,000 or more) and the insolvency practitioner may require payment of fees up-front.
- If your circumstances change, the IVA may end if the insolvency practitioner cannot get creditors to accept new terms. If this happens you will owe the full amount to your creditors again.
- Your IVA may have a built-in requirement to revalue your home and release equity to pay the creditors after a set number of years of payments (usually five). If this is not possible you are likely to be required to extend the IVA by another 12 months
- You can still be made bankrupt if the IVA fails.
Your creditors will agree to pay your Insolvency Practitioner a fee for managing the IVA. This fee is taken from your disposable income rather than from separate creditor funds. If you complete your IVA as agreed then you will pay no more than your scheduled monthly instalments. 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.
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.
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 (17% of monthly payment; minimum £25).
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What's the cost?
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Your first monthly payment covers our implementation costs. After that, our ongoing administration charge is 15%. This is included in your monthly payments - not added on.
