What is an IVA

An IVA is one of four main methods used in the UK to deal with personal debt issues. An IVA is short for an Individual Voluntary Arrangement. An IVA is mainly used in personal debt situations where there is a house or other assets that you wish to protect, although it can be suitable in other circumstances.

How does an IVA work

An IVA usually lasts for 5 years but can in some circumstances last for more or less time. It is an excellent way to clear your debts as it has many powerful advantages. A lot of people seem to not understand how does an IVA work. An IVA will usually:

• Clear your debt in 5 years
• Enable you to make lower payments for your debts
• Let you make payments you can afford for your debts
• Write off a large percentage of your debt, usually between 20% to 70%
• STOP your creditors ever contacting you again
• Allow you to keep your home and other assets

However although this sounds fantastic you have to realise that taking out an IVA is a serious piece of medicine. If an IVA fails it could result in you being made bankrupt. This will not necessarily happen all the time, but it’s something to be aware of. Therefore it’s vitally important to stay in touch with your insolvency practioner, and let him or her know if there are any changes to your financial circumstances.

Eligibility for an IVA

You are eligible for an IVA and meet the IVA criteria if the following apply to you:

• You owe £15,000 or more to all of your creditors
• You must not be able to afford the current repayments on your debts
• You must have 3 or more different creditors
• No creditor can be owed 75% or more of the total debt
• You must be able to afford to pay back at least £200 per month
• Your home must have less equity than the total debt you owe
• You must not be reliant on benefits for your income

Cost of an IVA

An IVA has some costs but they are indirectly paid by the creditors. You should never be asked to pay any IVA costs to get an IVA arranged. If you speak to anyone asking for money upfront you should run a mile!

How to get an IVA

You can contact us today using the contact forms on this site or call us directly using the number at the top of the page. We will carry out a detailed financial review with you and work out together what is the best debt solution for you. There are other debt solutions, and these must also be considered. ‘What is an IVA’ is owned by Money Managers and we will help you to find the best way to deal with your debts when we speak with you.  If an IVA is right for you then we will get it arranged for you at no cost whatsoever. You can begin the process on our website and apply for an IVA online.

There are other ways apart from an IVA to deal with your debts, so we’ve included a handy guide for you below.

The three other main ways to deal with debts

Debt Management Program

This is an informal arrangement with creditors. The amount that that you can afford to pay is calculated by the debt management company. All of your essential expenditure is calculated, and all of your reasonable living expenses are added to that. This calculation excludes what you pay on secured borrowings such as a house or car loan. This is so that your disposal income not including your debt is calculated.

Once you accurately know how much disposable income you have you will know how much you can afford to pay for your creditors. This is amount is divided between your creditors on a pro-rata basis. This means that your creditors will get a percentage of your disposable income according to the percentage you owe them out of the total debt. This is then offered to your creditors on a monthly basis. The debt management company will likely be able to get the majority if not all of them to stop charging you interest. This means that the debt will be paid back much more quickly than it would have been otherwise.

Debt Relief Order

A debt relief order is very similar to bankruptcy. It is however quicker, simpler, and cheaper to arrange than bankruptcy. To qualify for a debt relief order you:

• Must be able to afford to pay less than £50 per month to your creditors
• Must not be a home owner
• Have no assets worth more than £300, for example a car or a computer
• Owe less than £15,000 to all of your creditors
• Live in England or Wales

A debt relief order is a very powerful way to clear debts, but many people do not qualify for this due to their income or their assets.

Bankruptcy

Bankruptcy is a very quick way to clear ones debts. However although there is less stigma attached to bankruptcy these days, it is often seen as the last option. In bankruptcy it usually is not possible to keep your house or any high value items. The bankruptcy will clear your debt in just 1 year, although you may have to make payments to your creditors from your disposable income for up to 3 years.  If you are unsure if an IVA or bankruptcy is best, remember that it certainly is an option to be considered when you are in debt, but it’s best to look at this after other options such as debt management plans or an IVA are considered.

 

What to do now?

Have a read of our IVA FAQ’s or call us today or fill in our ‘call back’ form on every page of our website. We’ll soon get you on the road to clearing your debts and eventually being debt free. Our advisors are experienced and sympathetic to your situation and will do their best to help you if you are considering getting an IVA. We’ve never seen a debt problem that can’t be solved, and we’re sure once we’ve spoken you will feel a thousand times better no matter if a debt management plan or an IVA is best for you.

Call us now on 0800 112 3771 (from a landline) OR 01332 595 522 (from a mobile)

 

SEO by SEO Derby