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 or need further help with your IVA, Debt Advice Foundation provides a free, confidential helpline and can advise you and on whether you qualify. Click here to find out more.