If you have a regular household income but are struggling to keep up repayments on your unsecured debts, an Individual Voluntary Arrangement (IVA) could be the right solution for you.
But what is an Individual Voluntary Arrangement?
To put it simply, an IVA is a deal between you and your creditors that allows you to repay some or all of your debts over a set period of time. It’s a powerful insolvency tool that helps to relieve financial pressure by ring-fencing your creditors, giving you the breathing space that you need to get back on your feet again.
How we can help
At McAlister & Co, we have help hundreds of people with IVAs, and our sympathetic yet experienced staff can help you deal with your financial problems and find a way forward that works for you.
We understand that managing debt can be stressful and complicated – which is why proceeding with an Individual Voluntary Arrangement could make a real difference, allowing you to write off debt that you cannot afford to pay.
For more information about IVAs, including information on what is an Individual Voluntary Arrangement and how we can help, check out this blog.
Is an Individual Voluntary Arrangement right for you?
An IVA could be the right path for anyone with a regular household income who is struggling to keep up repayments on unsecured debt such as credit card debts and loans.
An IVA could also be the right solution for sole traders or self-employed individuals because in most cases, entering into an IVA will allow you to carry on trading, making it a much more attractive alternative to bankruptcy.
As a rule, the minimum unsecured debts of someone entering an Individual Voluntary Arrangement is £15,000, but it is often much higher.
What are the advantages and disadvantages?
An IVA is a formal, legally-binding procedure, and as such – as with any insolvency procedure – there are a number pros and cons involved that need to be weighed up so you can decide whether or not it is the right option for you.
Advantages:
- Interests of debts will be frozen
- You can reduce debt by paying a proportion of what is owed
- You may be able to retain assets such as your home
- At the end of the IVA period remaining debts are written off
- Creditors cannot make any additional demands for payment
- It offers fewer consequences for your career than filing for bankruptcy
- There is more protection if you own your business
Disadvantages:
- You will need to stick to the budget for the IVA period
- You may be asked to release some equity from your property
- IVAs are likely to appear on your credit file
- If you fail to keep up payments, you could be made bankrupt
- It may be difficult to obtain future credit
- You will be included on the insolvency register
How much will I repay?
With an Individual Voluntary Arrangement, you repay only what you can reasonably afford, for a fixed period of time. Once the IVA period is complete, any remaining debt is written off.
How does the Individual Voluntary Arrangement process work?
Setting up an IVA is a relatively straightforward process. In fact, your IVA could be set up in as little as six weeks, giving you peace of mind and enabling you to take back control. Here’s how the process works:
Step 1: Assessment
First, your situation will need to be assessed by an insolvency practitioner to see if you are eligible to enter into an IVA.
Step 2: Proposal
A proposal will then be drawn up based on the information you provide. In the proposal, you will need to include reasons why your business is insolvent and put forward the best offer of repayment that you can afford.
Once everything is prepared, the proposal can be filed at court. It will then be circulated among creditors and a moratorium will be applied, protecting you from legal actions.
Step 3: Approval
A copy of your proposal will be sent to each creditor who will be asked to vote to accept or reject it.
They will have 14 days to consider the proposal and to put forward any objections or concerns before the creditors’ meeting. If a majority accept, the IVA is approved and will be legally binding for all creditors.
Step 4: Payments
Once the IVA is approved, you will start to make the agreed payments. Agreed payments are reviewed each year to see if you can pay more or whether you need to ask your creditors to agree to a reduction in payments.
Step 5: Completion
When all of the agreed payments have been completed, the remainder of the debt will be cleared.
Want to find out more?
If an Individual Voluntary Arrangement sounds like the right solution for you, contact McAlister & Co today.
Our personal insolvency teams are experts in IVAs and can guide you through every step of the process, from answering the question “what is an Individual Voluntary Arrangement?” to helping you set your IVA up.
Just by getting in touch, you are taking the first step in dealing with your debt – and that’s a great feeling!
