Learn More About An IVA
Learn More

Process of Getting An IVA

An IVA is a legally binding agreement made between a debtor and his/her creditors. Due to the legality and regulations imposed on Insolvency Practitioners, there is a set process each IVA application must follow. You must:

Complete A Review and Budget

You will initially complete a review with a debt advisor (FCA Authorised or Insolvency Practitioners) to identify if an IVA is the right solution for you. This will include completing an income and expenditure order to understand really what you can afford.

The Income and Expenditure Budget will be based on the money you have left after living costs have been taken into consideration. This includes your household bills such as Rent/Mortgage, Food, Gas, and Electric.

The proposed payment in your IVA is designed to help still live a comfortable life while repayments are made to your debts, each year your income and expenditure will be reviewed to ensure any payments are still manageable.

An IVA (Individual Voluntary Arrangement) is a formal agreement made between the person in debt and their creditors. Once you enter into an IVA, your creditors can no longer take further action against you to recover any outstanding debts. All interest and charges associated with your debts are frozen. An IVA allows you to make affordable payments to your debts, usually over five or six years. At the end of your IVA any unsecured debt left is managed accordingly.

⚠IVAs are only available in England, Wales, and Northern Ireland.

Paperwork needed to start an IVA

You will have to provide proof of your financial situation. This could be in the form of a recent statement or a letter registered to your creditors, detailing the balance that you owe.  

Alongside this, you will also need to provide evidence of your income from the past three months, as well as any Tax Credits or benefits that you may be receiving. Self-employed workers will need to attach a copy of their latest tax returns. 

You will also be asked to show your last three months of bank statements. This will be coupled with your rental agreement or mortgage statement if you own a home. 

Typical information/paperwork needed:

  • Payslips
  • Bank Statements
  • Proof of Benefits
  • Photo ID
  • Proof of Address
  • Proof of Rent / Mortgage
  • Proof of Debts / Credit Report
  • Proof of Vehicle Finance
  • Proof of Childcare / Nursery Costs / Child Maintenance
  • Tax Return (Self Employed) – If No Tax Return Cashflow Forecast

Your qualified debt advisor can help you gather this information and many insolvency practitioners do not require all of the information listed above.

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Document Verification

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Prepare Your IVA Proposal

We will prepare and issue a proposal to your creditors, demonstrating to them how much you can afford to pay towards your debts.

Before this proposal is sent to your creditors, your Insolvency Practitioner will ask you to gather information. They will need to prepare your proposal as this is the basic information requested to help determine any solutions.

Once your IP (Insolvency Practitioner) has this information, they will prepare your proposal to be submitted to you for your perusal to make sure the information in your proposal is accurate as this is a legal document that will be sent to your creditors, this process is where the insolvency practitioner gives your creditors notice for your MOC (Meeting of Creditors) normally 14 days.

You will be expected to sign and date your proposal before it is issued to your creditors. Generally, this is done by e-signature but can also be done via post.

Meeting of Creditors (MOC)

Your creditors will meet with your IP to discuss your IVA. You will need 75% of your creditors to agree to your IVA proposal. You will receive a letter to officially confirm that the meeting of your creditors took place. 

Some of the creditors may request that a modification (change) is made to your proposal. Your IP will inform you of any modifications that are requested and you will be given extended time to decide whether or not you want to make them. A common example would be a request to increase your monthly payments or extend the length of your IVA. 

Your IVA cannot start until you have given your approval. Your IP will need to speak to you to 

make sure that you are happy to go ahead.

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IVA FAQs

What is an IVA?

An IVA, or Individual Voluntary Arrangement, is a formal agreement made between the person in debt and their creditors.

An IVA allows you to consolidate all your debt into one affordable monthly payment to clear your debt over a fixed period of time; IVAs will usually last five years, after which your debts are written off.

Whilst there are no legal maximum or minimum amounts you must owe to get an IVA, usually, you must have a debt of at least £5,000 to get your creditors to agree to the IVA. You can owe this amount across more than one debt, with more than one creditor.

An IVA stops your creditors taking further action against you to recover your debt. We negotiate with your creditors throughout the IVA, meaning that you will no longer have to deal with demands for money or threats from your creditors.

Which debts can you include in an IVA?

All unsecured debts can go into an IVA. Here are some examples of the debts you can include:

Credit cards – Here are a few examples: Vanquis, Barclays, Natwest, Lloyds, HSBC, Tesco, Capital One

Unsecured loans – Barclays, Lloyds, Tesco, Wonga, Adverse Credit Loans Apply now

Payday Loans – Wonga, Lending Stream, Amigo, Satsuma, QuickQuid

 Catalogue and store card debts

 Credit cards

 Personal loans

 Overdrafts

 Gas, electricity, and water bill arrears

 Tax credit/ benefit overpayments

 Debts to family and friends

 Other outstanding bills

Which debts can't you include in an IVA?

 Mortgages are protected (shortfalls can be included as unsecured debt)

 Other secured loans

 Hire purchase agreements (shortfalls can be included)

 Debts incurred through fraud

 Court fines (some can be included)

 TV license arrears

 Student loans (some can be included)

 Child support arrears

What are the advantages of an IVA?

No upfront fees

  It’s affordable. You only pay back what you can afford and normally only an agreed percentage of your debts.

  You make only a single payment each month which is distributed to creditors on your behalf.

  You will be able to deal with your debts in a set period of time, normally 5 years.

  Once your IVA is approved, all of your creditors must agree to the IVA and the terms and conditions attached to it.

  By law, all interest and charges are frozen as long as you maintain your payments.

  Your creditors will stop calling. Once enough of your creditors agree to an IVA at least 75% in value of the creditors will need to vote in favour.

  Legally binding this means a lot of creditor action, contact and demands will stop once the IVA has been approved. Creditors can still send statements, however, as they still own the debt.

  You won’t be forced to sell your home. Your home is a protected asset in an IVA.

What are the disadvantages of an IVA?

IVAs are an expensive way to deal with problem debts. Beyond the insolvency practitioner’s fees, which can be very high, in order to complete your IVA you must make regular monthly payments for around five years. If your circumstances are likely to change or you don’t have a predictable source of income an IVA is probably not right for you.

You may have to sell more expensive assets (like cars, valuable jewellery, or any property that isn’t your family home), and in some cases you may have to remortgage your home at the end of your IVA.

Some other disadvantages of an IVA are that you will find it more difficult to get credit if you’ve had an IVA, which can affect things like catalogue shopping and obtaining a mortgage, as well as the more obvious things like getting a personal loan or credit card.

Certain professions are also not allowed to practice if they have gone through an insolvency procedure, which includes IVAs. Common professions covered by these restrictions are accountancy and legal services, but you should check your contract of employment and with any professional bodies to find out if you may be affected.

 IVAs can be refused. Your creditors can refuse your IVA proposal but, in most cases, we can negotiate with your creditors to get your IVA approved.

  An IVA is a formal agreement, therefore, you need to make sure you comply with the terms and conditions attached to an IVA.

  Your monthly repayments may leave you with a tight budget whilst your debts are repaid.

 It will affect your credit score. IVAs remain on your credit file for 6 years from the day it starts, Some IVAs can last longer and this will show on your credit file for longer.

 Not all debts can be included in an IVA.  Some examples of debts that are not part of an IVA include student loans, child support and maintenance, magistrate court fines and social fund loans, but an allowance can be given to enable you to continue repaying these debts.

 If you fail to make the payments due under the terms of your IVA, then your arrangement could fail.

 Your IVA will be listed on the Individual Insolvency Service register.

 If you fail to make the payments due under the terms of your IVA, then your arrangement could fail.

Is my house protected in an IVA?

If you own your home, you will almost certainly be asked to get a valuation on your house in the last year of your IVA. If remortgaging the house would raise more than £5,000, you will be asked to remortgage it and any money raised will be put towards paying back your debts. You will not have to sell your home. If remortgaging would extend the mortgage beyond its existing term, or put you beyond the state retirement age when it ends, you will not be expected to remortgage the property.

If you can’t remortgage your house for any reason (refusal by the bank, or complications with a jointly owned property, for example), you will have to pay your usual monthly payments under the terms of the IVA for an additional year.

It is possible but unlikely that you will be able to keep your home out of the IVA and thus avoid remortgaging it. If your insolvency practitioner feels that you will be able to pay back enough of your debts without including your house in your IVA, they may propose that it be excluded from the IVA when negotiating with your creditors, but this rarely happens.

An IVA is a preferred option by many homeowners as your asset is protected whereas the alternative of bankruptcy you would in most cases be asked to sell you home.

If you rent your home, nothing will happen as long as you keep paying your rent but we would always advise for you to check your tenancy agreement before entering any agreement.

What happens if I miss an IVA payment?

Missing your IVA payment can be very risky. You must continually keep your insolvency practitioner up to date with your financial situation. Late payments may be acceptable if you have a valid excuse for them.

Once you have missed three payments, your practitioner will send you a ‘Notice of Breach’. Normally, you will be allowed between one and three months to explain the missed payments and correct the problem. Once you do this, no more action will be taken against you.

You should always speak to your IVA provider as they will be able to help you in such a situation.

What's the cost of an IVA?

An IVA (individual voluntary arrangement) is not free. Legally you cannot set up your own IVA. The insolvency practitioner who will set up your IVA will charge a fee.

This fee is normally taken as regular instalments from the payments you make towards your IVA (debts). The fee is to cover the cost of the advice offered by the insolvency practitioner, the time spent putting together the legal aspects of the IVA and negotiating with your creditors, also managing the IVA once it is set up.

What's the process of an IVA?

An IVA (Individual Voluntary Arrangement) was introduced as part of The Insolvency Act 1986 to help debtors come to an arrangement to pay debts over a set period of time as an alternative to bankruptcy.

An IVA is a legally binding agreement made between a debtor and his/her creditors, due to the legality and regulations imposed on Insolvency Practitioners, there is a set process each IVA application must follow. You must:

  • Complete a review and budget
  • Prepare your proposal
  • Organise a meeting of creditors (MOC)

An IVA (Individual Voluntary Arrangement) is normally only suitable for people who are struggling to maintain payments to their current debts and have a regular income.

In order to get an IVA, you must have spare income after you have met your essential living costs each month.

Your creditors will be obliged to agree to an IVA if you meet the other criteria needed to get an IVA plan. Your insolvency practitioner will be able to offer you more specific advice once they know your circumstances.

In order to qualify for an IVA, you must reside in England, Wales or Northern Ireland. You will also need to:

 Have £5,000 or more of unsecured debt

 Owe money to two or more creditors

 Live in England, Wales or Northern Ireland

 Maintain a payment of a minimum of £70 per month