It’s important before considering entering an IVA you know exactly what it means, how it works and what consequences you face once it begins.
What Is An IVA
IVA is short for individual voluntary arrangement and is a debt solution which helps people avoid bankruptcy. You make 1 monthly contribution to your debts for 5 years and any remaining debts at the end of the solution are written off.
How Much Is An IVA?
The contribution amount will depend on your income and expenditure, as well as if you have any assets. Before signing an IVA you should be told exactly how much you will be due to pay
Am i Suitable For An IVA?
It’s important you get free, impartial debt advice to find out if you are suitable. It is possible to be wrongly entered into an IVA so good debt advice is important. If you live in England, have debts above £10k and work full time with little or no assets you could be suitable.
What Happens To My Property In An IVA?
While an IVA will protect your property and it’s equity, if it’s enough equity to clear the debt or reduce it substantially this should be considered first. In most cases when there is large equity the insolvency prationer managing your case will simply add an extra year to the IVA, this is called the equity year.
Can I Take Out Credit When I'm In An IVA?
Yes, but only up to £500 and you have to declare you’re in an IVA before the credit is accepted.
Would The IVA Affect My Family?
Not directly unless they are also joint on the debt or you are joint any assets such as a mortgage. If you are joint on an asset only your half of it’s value can be considered. An example of this would be someone with a joint mortgage who enters an IVA, only 50% of the equity in the property can be released or considered the debtors.
Do All My Creditors Have To Agree For Me To Enter An IVA
No, as long as 75% of your creditors agree to the IVA it will go ahead.
Is There Any Fees
Yes, there are different fees, for different reasons such as nominees fee, supervisors fee, expenses, etc, however these are taken from your agreed monthly contribution.
Can Someone Else Pay The IVA For Me
Yes, you can propose for someone else to make your monthly contributions so long as they agree, however not all insolvency practitioners will prefer this option.
What If My Income Changes While In The IVA
The IVA is designed to have some flexibility, this means payments could decrease or increase if your income changes at any time. If you come into enough money to repay the full debt and fees the insolvency practitioner will require you to pay both.
How Is An IVA Different From A Debt Management Plan
The two major differences between an IVA and a debt management plan are,
- The IVA is a formal arrangement which means all interest and charges are frozen
- In a debt managment plan the full debt is repaid, while a percentage of the debt will be written off in an IVA debt solution