FAQ

Q: What is an IVA?
An IVA (Individual Voluntary Arrangement) is a legal process which lets someone who is struggling with debt the chance to make a formal proposal to their creditors in order to clear their debt.  If the IVA proposal is accepted by a sufficient majority of the creditors, then you will be able to wipe out up to 75% of your unsecured debts, you will be guaranteed debt free within five years, and all interest and charges are stopped immediately.

Q: What happens at the end of an IVA?
Once the IVA has been successfully completed, you will be considered debt free even though you may not have actually paid off all your original debts in full.  Any outstanding balances are written off, leaving you in a position to make afresh start financially.

Q: Who can enter an IVA?
Because of the costs involved, it is usually only practical for people whose debts exceed £15,000. Normally you will also need to be employed, with a household income of at least £1000 per month, and be in a position where you owe money to at least three creditors.

Q: How long does an IVA last?
An IVA normally lasts for five years but can be for a shorter period of time in some situations.

Q: Which creditors can be included in an IVA?
Creditors that can be included are unsecured creditors such as: banks, finance companies, credit & store card companies, HM Revenue & Customs, and friends and family. However, you cannot include your mortgage (because it is a secured debt), any hire purchase agreements, fines, debts incurred through fraud, or money owed for maintenance/child support.

Q: Will I lose my house?
No. But if there is equity in your property then this will be taken into account at some point during the IVA (usually at the end). If property is owned in joint names and the co-owner is not party to the debts that are included in the IVA, then their share of the equity does not have to be included in any offer to creditors.

Q: I run my own business. Can I continue to do so if I enter into an IVA?
Unlike with bankruptcy, there are no limits on your business activities whilst you are the subject of an IVA.

Q: Will my IVA be publicised?
No, unlike a bankruptcy which is always advertised, an IVA is confidential. Only your creditors will know about it. Even your spouse or partner does not have to be told about the IVA, although we would normally advise you to tell them about it anyway.

Q. Can I enter an IVA if I already have CCJs against me?
Yes.

Q: Do I need to be a homeowner to be eligible for an IVA?
No. You can apply for an IVA whether you are a homeowner, a tenant, or are living with your parents.

Q: Can I obtain an IVA if a Bankruptcy Order has been made against me?
Yes. It is possible to annul a bankruptcy by means of an IVA.

Q: What happens if I don't keep up the payments on my IVA?
If you default on your payments, then bankruptcy proceedings may be initiated against you.

Q: Will the IVA prevent my creditors taking any further to recover the debts?
Yes. Once the IVA has been set up, then your unsecured creditors are unable to take any further action to pursue the debt or seek to recover it through the courts.

Q: How long does it take to set up an IVA?
It typically takes six to eight weeks to set up an IVA.

Q: What happens if the IVA is not approved?
You will have to come to an informal arrangement with you creditors to repay your debts. This could be by negotiating a longer period of time to repay the debt, or you might be able to remortgage or take out a debt consolidation loan to clear your existing debts. You should talk to a mortgage adviser or an independent financial adviser to get advice on these options. If you are not able to come to an informal arrangement with your creditors, then your only other option is likely to be to declare yourself bankrupt.

Q: Does it cost anything to set up an IVA?
It costs nothing to contact a debt specialist via this website and there are no upfront fees payable to enter into an IVA. Obviously there are some costs involved in setting up an IVA with your creditors and the Insolvency Practitioner who acts as your "Nominee" and as the "Supervisor” of the arrangement needs to be paid for his or her services. However, you will not need to find additional money to pay for these services as the Insolvency Practitioner's fees are "agreed" with the creditors and will form part of the overall payments made into the IVA. In other words, all costs and fees are covered in full by the single monthly payments that you make once the IVA is in place.