Individual Voluntary Arrangements (IVA)

 

WHAT IS AN IVA?

• Legally Binding arrangement between debtor and their creditors to compromise debts
• Alternative to bankruptcy
• Requires the agreement of 75% (by value) of the creditors who bother to vote at the meeting for the IVA to be passed
• Creditors can seek to modify proposals
• Requires a Licensed Insolvency Practitioner
• Generally 5 years (sometimes 1 year when paying lump sum)
• One Affordable monthly payment
• Once approved, offer protection from creditor action
• Interest and charges frozen
• No direct cost to the debtor
• Offer debt forgiveness
• IVA completed satisfactorily, any shortfall ‘Written off’
• Alternative to bankruptcy.

 

IVA CRITIERIA

The general requirements that need to be met in order to go down the IVA route are as follows:

• Unsecured debts in excess of £15,000
• 3 or more lines of credit with at least 2 creditors
• Equity less than the amount of unsecured debt
• Disposable income of greater than £200 a month
• Home owner or tenant
• Must be employed or self employed

 

IVA PROCESS

DCM Money Solutions (or it's appointed representative) will help explain all these steps in more detail at the initial advice stage.

• Initial Advice
• Collation of relevant paperwork
• Drafting of proposal
• Convening of creditors meeting
• Creditors meeting
• Nominee becomes Supervisor
• Completion of IVA once terms satisfied

 

YOUR HOME IN AN IVA

You do not have to lose your home if you enter into an IVA. However it must be remembered that your home is an asset that could potentially gain in value considerably whilst in an IVA. To that end, you should be aware of the following that will happen if you are a home owner.

• Final year of IVA remortgage must be attempted
• Remortgage maximum of 85% of LTV
• If remortgage cannot be obtained IVA must be extended by 12 months to compensated the creditors
• Contributions adjusted in relation to new mortgage payment
• If increase in mortgage payments due to remortgage means surplus income is less than £50 contributions ceased at this point
  Supervisor has discretion.

 

PAPERWORK REQUIRED

The following will be required by the insolvency practitioner so ensure you can get access to these:

• 3 months bank statements
• Last 3 months payslips/latest accounts
• Mortgage and Secured loan statements
• Rental agreement
• Creditors statements and balances
• Proof of ID
• Car details (Log Book/HP agreement)

 

DIFFICULITES WITH IVAs

• Creditor Hurdle rates may be barrier
• Credit rating affected for 6 years
• Failure to adhere to IVA terms may result in Bankruptcy
• Commitment required from Debtor
• Step payments may be required (example Car HP ending may result in increased IVA payments)

 

 

 

IVA Failures

There are an increasing number of people reporting that their IVA has failed, not necessarily because of anything they have done wrong. If you are one of these people then you must get in touch with us sooner rather than later. We are one of the few debt solutions companies that didn't push IVA's from day one which is why you can be sure the advice we give is honest and the best for you. Our reputation is built on success for our clients.