What is an Individual Voluntary Arrangement?
An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between you and your creditors to repay what you can afford over a set period, typically 5-6 years. Administered by an Insolvency Practitioner (IP), an IVA typically lasts five years, although it may be extended by 12 months for homeowners if they are unbale to release equity in the final year. Creditors vote to approve or reject the proposal, with 75% (by value) required to agree for it to proceed.
Debt Free Associates Limited provides FCA-regulated debt advice and, if an IVA is the right solution for you, we can refer you to a licenced insolvency practitioner who specialises in the proposal and administration of IVAs.
Eligibility criteria
To qualify for an IVA with our trusted partner, you must:
- Have debts of £7,000 or more.
- Owe money to at least two creditors.
- Have a fixed income.
- Be able to pay at least £100 per month toward your debts.
How does an IVA work?
Proposal creation
Your Insolvency Practitioner drafts a repayment proposal to present to your creditors.
Creditor approval
At least 75% of your creditors (by value) must approve the IVA.
Payments and oversight
You make regular monthly payments, which your IP distributes to creditors. Any new income or assets must be reported and may need to be paid in.
Completion
After successful completion, any remaining debts included in the IVA are written off.
Benefits
- One affordable monthly payment.
- Interest and charges are frozen once approved.
- Creditors cannot take further action to recover debts included in the IVA.
- Most debts can be included.
- Remaining debts included in the IVA are written off upon completion, provided you adhere to its terms.
Considerations
- Your credit rating will be affected for six years.
- You’ll appear on the Insolvency Register, which is a public record, for the duration of the IVA until three months after completion.
- Restrictions apply, such as requiring consent to borrow more than £500.
- If the IVA fails, you could face bankruptcy.
- Fees are deducted from your monthly payments.
Examples of debts that can be included*
Credit & Store Cards
Personal loans
Catalogues
Overdrafts
Buy Now, Pay Later
Payday loans
Examples of debts that may be included*
Utility bill Arrears (gas, electric, water)
HMRC debts (self-assessment)
Benefit overpayments (DWP or local authority)
Council Tax Arrears
Rent arrears
Debts to friends or family
Examples of debts that cannot be included*
Child maintenance arrears
Student loans
Secured loan arrears
Court fines
Mortgage arrears
Car financing arrears (including PCP & HP)
Faqs
Yes, if less than 75% of your creditors approve the proposal. Your IP can revise the terms and resubmit the proposal.
An IVA may require changes to your spending habits, and any significant new income or assets must be reported to your IP, who may adjust repayment terms accordingly.
Not usually, unless you work in financial services, law, or accountancy. Check with your HR department if unsure.
Yes, if you receive a lump sum to repay your debts in full. Approval from your IP and creditors is required.
Yes, small savings from your approved budget can help cover unexpected expenses.
The amount depends on how much you’ve repaid during the term. Remaining qualifying debts are written off at the end.
Failure to:
Make agreed payments.
Report changes in financial circumstances.
Sell agreed assets.
Pay additional income.
Fees typically include:
Nominee Fee: For drafting and presenting the proposal.
Supervisor Fee: For managing the IVA.
Combined fees above are typically fixed at £3,650 and are deducted from your monthly payments.
How can Debt Free Associates Limited help?
Our knowledgeable team can assess the best option for you and connect you with trusted partners who can administer the arrangement.
Contact us today or use our live chat for immediate assistance.