IVA explained

Most people have never heard of an Individual Voluntary Arrangement and need the IVA explained in order to know whether it's for them. There's a link to our main IVA page - what is an IVA, if you want a detailed explanation. If you're looking to have the IVA explained quickly, here's a summary.

An IVA is a legally binding insolvency solution that enables anyone struggling with large, unmanageable debts to pay back only what they can afford.  By taking a detailed look at what you owe and what you can afford to repay, an Insolvency Practitioner will propose a new lower monthly repayment to your creditors.  This will be set at a level that is fair to your creditors and manageable for you (i.e. how much you have left after your essential expenditure and priority debts have been taken into account).

Interest and charges will be frozen and typically, it involves a write off of a part of your debt. Once set-up the IVA is legally binding, which means your creditors can't change their minds.  It also protects you from your creditors taking any further enforcement action against you or your home.

IVA

If you decide to investigate IVA's further, use a company offering a free IVA. Speak to one of our recommended debt advice charities to find a suitable solution for your situation. >>

Summary

IVA (Individual Voluntary Arrangement)

  • Introduced by the Government in 1986 as an alternative to bankruptcy
  • Typically, you need to owe more than £15,000 and have something to offer to your creditors each month
  • Typically you can write-off 50% - 60% of your debt and pay the balance over 5 years (60 months)
  • Interest and charges stop and creditors can't change their mind
  • Your home is protected but you may be required to release any equity you have
  • Someone enters an IVA in England and Wales every 13 minutes
  • We only recommend organisations that have a track record of getting IVA's accepted by creditors and don't charge upfront fees

Comparison Table Of Debt Solutions

Solutions
Debts Written Off
Legally Binding
Interests & Charges
Residential Status
Fees
Notes
IVA
Yes - Average 58%
Yes
Stopped
Tenant or Homeowner (Eng/Wales)
Yes on average around 20% of the payments you make to creditors
Typically you must have debts over £15,000 and be able to offer yourcreditors about 20% of the value of the debt back over 5 years.
Debt Management
No
No
Many Freeze
Tenant or Homeowner
Yes
In a Debt Management Plan, you will be required to repay all of your debt in full.
Consolidation
No
Yes
New Rates & Charges
Tenant or Homeowner
Yes
Consolidating your debts generally means you'll pay more back over a longer period of time.
Bankruptcy
Yes
Yes
Stopped
Tenant or Homeowner (Eng/Wales)
Yes - up to £700 depending on your circumstances. You may also be subject to a 3 year Income Payments
You need to think carefully about all the affect bankruptcy will have on your home and your employment.
Debt Relief Order
Yes
Yes
Stopped
Tenant
Yes - £90
You must have debts under £15,000 and have little in the way of assets