Writing off debt
you cannot afford to pay
If you have multiple debts you are struggling to pay off, then applying for an Individual Voluntary Arrangement (IVA) could be exactly the solution you need. .
An IVA is a legally binding agreement which allows you to manage your debt by arranging to pay it off at an affordable monthly rate, even writing some of it off completely
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Individual Voluntary Arrangement
How could an IVA help me manage my debts?
An IVA can help you take control of and manage your debt in two ways:
- First, your debt repayments are consolidated into one simple monthly payment, which is purposefully set at an affordable amount. At this stage, an IVA is very much like a Debt Management Plan, only an IVA is legally binding. This means that your creditors are not allowed to pursue you for any of your debts once the IVA has been arranged.
- Second, once payments at the agreed rate have been kept up for an agreed amount of time (usually five to six years), any outstanding debt is written off.
What is an Individual Voluntary Arrangement
An Individual Voluntary Arrangement is a legally binding debt management solution which allows you to pay off your outstanding debt at an affordable monthly rate for a set period of time, after which the remaining debt is written off. The monthly sum is sent to an Insolvency Practitioner and from there is distributed amongst your creditors.
Like declaring bankruptcy, an IVA is a form of insolvency. That means, you are officially declaring that you are unable to pay off in full any outstanding debts you have. However, unlike bankruptcy, those who take out an IVA will pay off a portion of their debts, and will generally be able to keep their house.
An IVA is only available in England and Wales. If you live in Scotland a Trust deed is a close equivalent.Trust Deeds
Pros and cons of IVAs
IVA: Write off the debt you can't afford to pay
- Fixed period to repay your debts usually 60 months
- Interest & charges frozen once agreed.
- Maintain a reasonable standard of living whilst repaying your debts
- Prevent or stop legal action including bankruptcy
- Your credit rating will be affected for a minimum 6 years which may affect your ability to obtain credit in the future
- You will not be permitted to take out any further unsecured credit
- Homeowners may be required to release equity from their property
- Failing to make the agreed payments could result in the failure of the IVA
The Money Expert IVA Application Process
Applying for an IVA through Money Expert is quick and easy. Here's what you need to do:
Spend 60 Seconds filling in the form
Fill in our short form so we can get an idea of your situation and give you advice tailored to you personally. Filling in the form is quick and easy and requires no obligation from you.
Money Expert will provide you with advice on whether an IVA is the best solution for you.
Once you've filled in our short form and we've got the necessary information, we can provide you with advice relating to an IVA . We'll look at your situation and help you decide if an IVA is the best solution.. If not, we may advise an alternative debt plan such as Debt Management.
Should you decide to enter into an IVA Money Expert will negotiate an IVA plan suited to what you can afford.
If you decide, based on our advice, that applying for an IVA is the right move for you, then we will work out with you a monthly payment plan that is within your means and contributes a sufficient amount towards your outstanding debts. Once we have gathered proof of your income and expenditure and all the information needed to make a proposal to your creditors we will refer your file to our experienced team for the ongoing administration of your IVA.
You will enter into an IVA plan according to a monthly amount you can afford, at the end of this period your remaining debt will be written off.
From here your IVA will officially begin, and for the next five years (normally 5 years, but it occasionally can be 6 years) you will pay the agreed sum every month to an insolvency practitioner who will then distribute it among your creditors.
Once the five year period is over, the IVA ends and any remaining debt is written off.
Is an Individual Voluntary Arrangement Right For Me?
If you are looking for a solution to multiple credit card debts and/or loans, the repayment of which exceeds your means, then taking out an IVA could be the right decision for you.
An IVA is a form of insolvency which, if you have the income to qualify for it, is preferable to declaring bankruptcy, mainly due to the fact that you are more likely to keep your house and possessions with an IVA.
However, as it is a form of insolvency, your IVA will appear on the insolvency register and could adversely affect your credit rating if/when you apply for any future credit.
There are also costs associated with IVAs, a set up fee and a handling fee on each payment so bear this in mind when considering an IVA as a possible debt solution.
What fees will I pay on an IVA and what are they for?
You will pay an initial set-up fee which is usually two months payments. This fee is paid to Money Expert and covers the preparation of your income and expenditure form to calculate what you can afford to pay each month, providing a courier to pick up documents required for the proposal, informing your creditors of your intention to enter an IVA, providing ongoing advice and information and preparing your file to be passed to our Insolvency Administrator at Money Expert.
If the IVA proposal is accepted, in the third month you will be paying fees on a monthly basis to our IVA company for the nominee fee for five months and then for the remainder of the term of the IVA 15% of your monthly payment will be paid to the Insolvency Practitioner for their supervisory fee.The term and amount of the nominee fee and supervisory fee can vary according to the individual circumstances of the case. The nominee fee and the supervisory fee come out of your pre-arranged monthly payment and are not in addition to this. This ensures that you have enough to maintain a reasonable standard of living while in the plan.
Money Expert will always endeavour to be clear about our fees. Should the IVA fail for any reason we will work with you to establish if another debt solution is appropriate. If you do sign up to a different plan through Money Expert we will not charge you an additional initial set-up fee to put this in place.
What are the requirements for entering an IVA?
There are certain requirements for those who wish to enter into an IVA, and they are as follows:
- you must be in debt to the value of at least £8,000
- You must be in debt to two or more separate creditors
- You must be able to afford a monthly payment of at least £100 and your income must not be solely benefits based
- If you are a home owner, you must be willing to release any releasable equity from your property.
What IVA Advice will I receive during the process?
We are available to offer any advice you need throughout the process. If you have any questions, let us know, and we'll answer them.
You should also remain in regular contact with your insolvency practitioner as they will be in contact with the creditors and will be able to offer information specific to your case.
The difference between an IVA and Bankruptcy
Bankruptcy and IVAs are both insolvency solutions that, while not mutually exclusive, do differ in important ways, namely:
- Assets: if you declare bankruptcy you will most likely lose your property, any luxury assets such as your car, and any other possessions which the trustee deems appropriate. In the case of an IVA, you will be able to keep your assets and your house, though you may need to re-mortgage in order to keep your house.
- Publicity: Declaring bankruptcy is a public matter, not only will your details be published on the insolvency register, but you will also be required to inform certain parties such as banks in certain situations, and your bankruptcy may be published in local newspapers. Entering into an IVA is a more private insolvency solution.
In addition, a creditor to whom you owe £750 or more can apply to have you declared bankrupt, while an IVA (as the name would suggest) can only be entered into voluntarily by a debtor who owes at least £8,000.
Frequently Asked Questions
Can I enter into an IVA with bad credit?
You will be able to enter into an IVA regardless of your credit rating or history, but, as your IVA will appear on the insolvency register and be recorded for a long time, it may adversely affect your ability to apply for credit in the future.
A bad credit rating is fixable though, by means of a bad credit loan for example.
Will Money Expert charge for IVA advice?
If you decide to sign up for an IVA then fees are payable as shown above. However, we do not charge for the initial call where we provide you with an assessment of your current position, advise on whether a debt solution would be suitable for you, and if so which product would be most appropriate. We're here to help you get out of debt, and not to make you pay for our advice.
Is an Individual Voluntary Arrangement legally binding?
An Individual Voluntary Agreement is a legally binding contract between debtor and creditor. This is how it differs from a mere Debt Management Plan. Your creditors are not within their legal rights to pursue you if you have entered into an IVA.
How many creditors can an IVA cover?
There is no limit to the number of creditors an IVA will cover, though each case will be judged individually and so if your number of creditors is overly excessive, you may be refused an IVA.
How much does an IVA n cost?
Costs will differ from case to case and is negotiated between your Insolvency Practitioner and your creditors. The costs are included in your monthly payment. We will make sure to help you get the best rates and lowest overall costs if you wish to enter into an IVA
Am I obliged to enter into an IVA arrangement after receiving advice?
No, our advice comes with no obligations . We won’t bind you into any arrangement simply for enquiring, we're here to help you not to trap you into an arrangement you don't want to be part of.
How much will I have to pay each month?
Again, this will depend on the amount you owe and the arrangements made by your Insolvency Practitioner. The amount will be calculated so as to fit with what you can afford.
What if my financial circumstances change during an IVA?
You will be able to apply for an early full settlement if your financial circumstances improve during the course of your IVA. To do this, you will need to contact your Insolvency Practitioner to work out the costs. If your circumstances deteriorate your Insolvency Practitioner can negotiate with your creditors to reduce your monthly payment.
Can I apply for a mortgage during an IVA?
You will be able to apply for a mortgage during the course of your IVA, however because of your situation you are unlikely to get the best deals available. Compare mortgage rates with Money Expert and we'll make sure to find you the best rates that you can get.
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- Have one affordable monthly payment
- Reduce demands from your creditors
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