Speak to one of our specialist advisors 0808 156 7730

Q&As and Ask an Expert

How does an IVA work

10 years ago - Posted by

I have been told that an IVA is my best option but I am not clear about it. How does an IVA work? Thanks

Struggling with debt?

Find out if you are eligible to write off unaffordable debt.

2 Answers

TAD Member

10 years ago

IVA as a debt management tool is not necessarily the best option for everyone, it should be looked into carefully, with professional and expert advice.
An IVA could be a flexible and effective way of getting rid of notably credit card debts as you can expect to write off between 25% and 70% of your unsecured personal debts However, the exact amount of debt that you can write off with your IVA will depend on what you can afford to pay and you estimated monthly disposable income.
The fixed amount that will have to be repaid each month for most of the time a period of 5 years will depend on individual circumstances, home-owners for example would be required to pay a percentage of the equity into the agreement.
IVA can be great options as unless your financial circumstances improve significantly during the life of the IVA, creditors should not be able to demand increased instalments, and if your monthly IVA payments don’t cover the entire amount of your debts, your creditors will usually write off the rest of your debts.
If in doubt, it would worth reading more on the matter : http://www.debtlifeboat.co.uk/ clearly explain what it involves, the ins, the outs, and for whom would IVA be good solutions, personally found it very helpful and straightforward.

TAD Member

10 years ago

An IVA is a formal arrangement between a person in serious debt and their creditors.

It usually involves making one monthly payment over the term of 5 years (60 months). An IVA firm administers the arrangement and deals with your debts. Any debt you are not able to pay during the arrangment is written off.

It takes the form of a proposal which is put together by a licensed insolvency practitioner (IP) who acts for you.

You will have a long conversation with an IP or their staff and they will draft your proposal and send it to you. When you are happy with it and the IP is happy it is a good offer for the creditors they will summon a meeting of creditors.

This is a virtual meeting – you don’t have to attend, just be by a phone.

If 75% by value of those creditors who vote are in favour the arrangement is passed and is binding on all creditors.

IVAs are not suitable for everyone and you need to have all the options explained to you – including the brand new Debt Relief Order – so you can make an informed choice.

This question was answered by Debt Advice Foundation, an independent UK debt advice charity. If you’re considering entering into an IVA, Debt Advice Foundation provides a free, confidential helpline and can advise you on whether you qualify. Click here to find out more.

Debt solution finder

FREE personal debt advice

Complete our debt solution tool to get FREE individual debt advice now

  • Completely anonymous
  • Free and easy to use
Try our debt solution tool

If you have a question on a particular debt topic, you may find the answer in the questions below or in our full Q&A section.

Request debt help & advice

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Aenean rutrum lacus at magna lacinia efficitur. Sed sodales, diam ac aliquam tristique, urna ligula eleifend lorem.

Our team of specially trained consultants can advise you on the best debt solution based on your current situation. For confidential advice Just fill in the form below and one of our team will call you back

If you consent to us contacting you for this purpose, please tick here

Live Chat

Got a question? Our advisers will point you in the right direction.

  • Monday to Friday, 8am to 8pm
  • Saturday, 9am to 1pm
  • Sunday and Bank Holidays, closed
Launch chat

Call us

Got a question? Our advisers will point you in the right direction.

0808 156 7730
  • Monday to Friday, 8am to 8pm
  • Saturday, 9am to 1pm
  • Sunday and Bank Holidays, closed