IVA

What is an IVA?

An IVA or Individual Voluntary Arrangement is a legally binding contract between you and your creditors (the people you owe the money to). You pay an agreed monthly sum for up to 6 years though more often 5 years. The money is split between all the people you owe, who accept the payment in settlement of the amount you owe them. The amount you pay will depend on your circumstances. You will only pay what you can afford taking into consideration your income and outgoings.

How will an IVA affect me in the future?

Your IVA stays on your credit history for one year after your IVA ends. This may affect your credit rating.  Some lenders will take into consideration your proven ability to make regular payments during the 5 years.
You will also not be able to get credit during the IVA period.

How much will an IVA cost?

The cost of your IVA will vary depending on what you can afford. Your income and outgoings are taken into consideration when your proposal is made.

What are the other options?

Other options available are bankruptcy and personal agreements with your creditors. Each of these has its own implications which you can read about on the relevant page.

IVA Pros:

  • The IVA is binding. This means providing you meet your side of the IVA your creditors can not pursue you for the debt.
  • The IVA is final. Once you have completed the IVA your debts are wiped.
  • You only pay what you can afford. The agreement assesses your ability to pay and finds an amount which is satisfactory to both yourself and your creditors.
  • You are allowed to open a bank account during your IVA so you will be able to maintain control of your finances.
  • You can normally remain safe in your house.

IVA Cons:

  • Failure to maintain your IVA agreement may result if legal action or bankruptcy.
  • You can not borrow money during your IVA. This means no credit cards or overdraft.
  • IVA will remain on your credit history for one year after the IVA is over.
  • Any equity in you house may have to be released for your creditors (via remortgage so you can remain in your house).
  • Under £15,000 of debt does not qualify for IVA