What Is An IVA Debt Solution?
An Individual Voluntary Arrangement often referred to as an IVA is a formal legal procedure between you and your creditors which is Government backed.
Sometimes the IVA is referred to as a Personal IVA or a Self-Employed IVA both of which are identical and available to individuals who are employed or self-employed and in some cases those in receipt of benefit only income.
What Is a Personal IVA?
A Personal Individual Voluntary Arrangement more commonly referred to as an IVA is a formal legal procedure between you and your creditors which is Government backed.
Most unsecured debts including credit cards, store cards, unsecured loans, overdrafts, utility company arrears, Council Tax arrears, tax credit or benefit overpayments and debts to family and friends can be included in your IVA
Personal IVA is available to individuals in employment and in certain cases those in receipt of benefits or pensions payments.
What Is a Self-Employed IVA?
A Self-Employed Individual Voluntary Arrangement also known as an IVA is a formal legal procedure between you and your creditors which is Government backed.
It is virtually identical to a personal IVA with the main difference being that you can include unsecured business debts such as HMRC liabilities, Suppliers liabilities and Utility Company debts, alongside your personal debts.
The Self-Employed IVA is only available to Sole Traders and Partnerships.
Settle Unsecured Debt
The IVA helps people who are in financial difficulty to settle their unsecured debt within a reasonable timeframe. Normally you will make monthly contributions over a 5 year period.
An IVA arrangement will stop any further interest and charges being added to your debt. And creditors will be prohibited from demanding additional payments.
An Insolvency Practitioner (IP) who is known as a ‘Nominee’ will arrange your IVA including a full assessment of your finances. Once completed the Insolvency Practitioner will produce a proposal which is sent to your unsecured creditors.
An IVA is only available to UK residents in England, Wales and Northern Ireland.
At Orchard Debt Solutions we work with a panel of Insolvency Practitioners and the most suitable will be selected for your circumstances.
Required IVA documents
We work closely with yourself to collate required documents and produce income and expenditure statements and cash flow forecasts if required. We will ensure that the process is hassle free from start to finish and we will work closely with yourself and the IP.
It’s important that you disclose all your asset and liabilities to your Nominee.
Everything in your proposal is treated confidentially and you will maintain control over your assets. Your proposal outlines your personal circumstances and details available income after living costs and household bills are deducted from income.
Your available income is offered as a monthly contribution to your unsecured creditors in full and final satisfaction of unsecured debts.
Your proposal will be sent to your creditors by your Insolvency Practitioner for them to review. They will then have to vote on whether to accept or reject your IVA proposal. This happens at a meeting of creditor’s and is not as scary as it sounds as normally voting is via post, fax or email.
For the IVA to be accepted, 75% of the creditors in debt value must agree to your IVA proposal.
If the voting is less than 75% your IVA will be rejected. When 75% has been achieved your IVA becomes legally binding on all creditors.
In most cases creditors will approve the proposal as they are likely to receive a higher amount if you enter an IVA than they would if you declared yourself Bankrupt.
Upon approval, and as long as you obey the obligations of the IVA your creditors are unable to take any legal action against you or pursue you directly for the debt.
An IVA is one of many debt solutions that can be considered and all other options should be explored and prior to entering into an IVA. One of our Team will talk you through the options available along with the pros and cons of entering an IVA.
- You make one affordable payment over a fixed period.
- Creditors must freeze all interest and charges.
- The IVA is a private matter between you and your creditors.
- All legal action against you is stopped.
- When you make your final payment, debts are written off.
- An IVA will only deal with unsecured debts.
- Your credit rating might be affected.
- Failure to make monthly payments could result in a creditor making you bankrupt.
- Property owners might be asked to release equity from property.
- Lenders might not approve the IVA proposal.