IMPORTANT TO UNDERSTAND
An Individual Voluntary Arrangement (IVA) can help some people deal with unaffordable unsecured debt, but it is a formal insolvency procedure with significant commitments and consequences. Understanding both sides is essential before deciding whether to proceed.
LOOKING AT BOTH SIDES
An IVA may offer a structured arrangement with creditors and a route to resolving qualifying debts. However, it can affect your credit history, assets and financial flexibility, and there are consequences if it does not complete successfully.
Depending on your circumstances, an IVA can offer advantages over continuing to deal with unaffordable debts individually.
An IVA can provide a structured way to deal with qualifying unsecured debts.
Once approved, an IVA generally binds creditors covered by it, even if they did not vote in favour.
Your agreed contributions are based on the terms of the proposal and your circumstances, with reviews and possible changes during the IVA.
Creditors bound by the IVA are generally prevented from taking separate action to recover debts covered by it while you comply with its terms.
An IVA offers a defined arrangement for addressing included debts, provided you meet its obligations.
After successful completion, remaining qualifying balances covered by the IVA are normally written off in accordance with its terms.
These consequences are an important part of deciding whether the advantages of an IVA make sense for you.
An IVA affects your credit history. It normally remains on your credit file for six years from the date it starts, even if completed earlier.
Your details appear on the public Individual Insolvency Register while the IVA is active and are normally removed three months after it ends.
You must meet the agreed obligations, provide information when requested and report relevant changes in circumstances.
Your contributions may change if your income or circumstances change, according to the terms of your IVA.
If you own a home, its value and available equity may affect your IVA obligations. Your home is not automatically protected from every risk.
If your IVA fails, creditors may be able to pursue remaining debts, and you could face further action, including bankruptcy in some circumstances.
IMPORTANT DETAILS
The specific terms of your proposal matter. Ask questions about costs, your property, the treatment of creditors and what would happen if your circumstances changed.
An IVA involves fees and expenses, including fees for the insolvency practitioner. These are set out in the proposal and are generally paid from the funds contributed to the arrangement. You should understand what you are expected to pay and how the money will be distributed.
Not every debt can be included or written off through an IVA. Secured borrowing, such as a mortgage, remains subject to its own terms, and some liabilities are excluded. Your full debt position needs to be reviewed.
An IVA is only one possible approach. A debt management plan, debt relief order, bankruptcy or another option may be more suitable, depending on your circumstances. Explore alternatives to an IVA.
COMMON QUESTIONS
These are general answers. The terms of a particular IVA and your circumstances can change what applies to you.
Yes. An IVA has a significant impact on your credit history and normally remains on your credit file for six years from the date it begins. It may make borrowing or obtaining some financial products more difficult.
Many homeowners remain in their homes during an IVA, but property equity can affect the proposal. Depending on the agreed terms, you may have obligations relating to equity, additional payments or other arrangements. These must be understood before proceeding.
Yes. IVAs involve fees and expenses, including the insolvency practitioner's fees. These are explained in the proposal and are generally paid from the money contributed to the arrangement. You should understand their effect on payments to creditors before agreeing.
Contact your IVA supervisor as soon as possible. Depending on the circumstances and terms, changes or other steps may be possible. If the arrangement fails, you may still owe debts and creditors may resume recovery action.
THE BALANCE MATTERS
An IVA should not be chosen simply because it could reduce the amount ultimately repaid to creditors. Affordability, assets, alternative solutions, the likelihood of completing the arrangement and your wider circumstances all matter.
A GOOD PLACE TO START
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