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An IVA (individual voluntary arrangement) offers a way to pay back multiple debts through single, affordable, payments. A legally binding agreement between you and your creditors, it can be quite flexible and tailored to suit your needs.
As an IVA is legally binding, it must be set up by a qualified individual – known as an insolvency practitioner. In brief, this person will work with you to identify suitable timescales and repayment plans. Next, he or she will present this proposal to your creditors and – if agreed – the IVA shortly comes into effect.
As well as helping deal with unmanageable finances, an IVA can be an effective way to gain protection against creditors and prevent bankruptcy.
The qualifying criteria for an IVA can vary between insolvency practitioners but, generally, they will focus on the following areas:
Although you don’t have to be employed to qualify for an IVA, a payment plan must be agreed. Therefore, only those with a regular, sustainable source of income should apply. Although employment is recommended, this source of income could also include:
An insolvency practitioner will usually consider an IVA a suitable option if an applicant has combined debts of at least £6,000. However, this figure is not inflexible. There is no official minimum debt level for an IVA but most practitioners will generally work with those who owe sums around this number.
For the IVA to be approved, your insolvency practitioner should be able to demonstrate that your creditors will receive a higher return through this solution than bankruptcy. It is for this reason that most creditors will agree to a reasonable IVA proposal.
IVAs are not available to those living in Scotland. However, something very similar exists called a trust deed. There are some differences, however, such as those handling the agreement are referred to as ‘trustees’ rather than insolvency practitioners.
Those who owe money to at least two creditors – and cover the criteria above – will usually be eligible for an IVA.
During the IVA application process, your insolvency practitioner will help identify suitable repayment periods and timelines. Consequently, this amount can vary from person to person depending on personal circumstances. However, minimum payments for an IVA are generally around £70 per month.
Even if you don’t conform to the qualifying criteria above, there may be other debt solutions which are more suitable for you. To identify how we can help you tame your finances, get in touch with our specialist team today through the contact form or by calling 0161 956 2689.
With no obligation on your part, we’ll be happy to discuss your circumstances and identify the best solution for your needs.
Debt write off applies to unsecured debts and on completion of an IVA. A debt write off amount of between 20% and 80% is realistic, however the debt write off amount for each customer differs depending upon their individual financial circumstances and is subject to the approval of their creditors.
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Free money help and advice can be found at the MoneyAdviceService.org.uk