The Individual Voluntary Arrangement Explained

The Individual Voluntary Arrangement (IVA) is a possible solution for those people who are struggling to pay off their debts. At the moment there are a lot of debtors in the UK who find themselves in the position of not being able to pay off their creditors. This means that their life is often full of stress and worry because of concerns about their financial future. The IVA is not something that will work for everyone, but it can be a great solution in many situations.

The Individual Voluntary Arrangement Explained

Here are just a few of the things you should know about the IVA:

• The difference between and IVA and bankruptcy is that you will usually have more control over your assets. When you declare yourself bankrupt all your assets are sized by a trustee and divided up amongst your creditors. With an IVA it is possible to negotiate which of your assets will be part of the arrangement. In a lot of instances this will mean that people get to hold onto their home.
• If an IVA is agreed then it will not be possible for creditors to take further legal action against you unless you break the terms of the agreement. This means that you now cannot be made bankrupt.
• The usual agreement for an IVA is for less than £300 a month to be paid over five years.
• The IVA is arranged by a special type of solicitor known as an insolvency solicitor. You will need to pay this solicitor a fee for their services. This may be as high as £4000.
• In order for you to be eligible for an IVA your debts need to be unsecured. You also need to owe money to more than one creditor.
• It is only really possible to apply for an IVA if you have debts that amount to more than £12,000. If you owe less than this it would not be an option.
• It is the job of the insolvency solicitor to create a detailed proposal for what you can pay back to the creditor – this will be less than what you owe. The creditor is under no obligation to accept this proposal, but they often will because it saves them having to pay the legal costs of declaring your bankrupt.
• The IVA is only applicable to those people who live in England and Wales. People who live in Scotland can apply for a Trust Deed.
• The amount you will need to pay back as part of the IVA agreement will always depend on the amount you can afford. The insolvency solicitor will sit down with you and carefully go through your budget. There is no point in agreeing to an IVA if you cannot afford to meet the terms of it.
• If one creditor owns more than 75% of the debt and agree to the IVA it will mean that the creditors who owe the remaining 25% will be obligated to agree to it.