IVA FAQs

  1. What is an Individual Voluntary Arrangement (IVA)?
  2. Why does an IVA require an Insolvency Practitioner (IP)?
  3. How do I set up an IVA?
  4. Do all my creditors have to agree to an IVA?
  5. Do I have to attend the creditors' meeting?
  6. What makes an IVA a good solution to my debts?
  7. Why would my creditors accept an IVA?
  8. How much will it cost me?
  9. What if I can't make my payments?
  10. What will happen at the end of the IVA?
  11. I'm a homeowner - what will happen to my home?
  12. Is there a professional body?

1. What is an Individual Voluntary Arrangement (IVA)?
A. An Individual Voluntary Arrangement (IVA) is a way of paying your unsecured debts without entering into bankruptcy.

It is a legally binding agreement between you and your unsecured creditors. Rather than paying your creditors directly, you agree to spend a set time period (usually five years) paying an agreed amount into the IVA every month. Your creditors agree not to take any legal action against you and to write off any unsecured debt that's left once your IVA reaches a successful conclusion.

An IVA can only be set up by a licensed Insolvency Practitioner (IP).

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2. Why does an IVA require an Insolvency Practitioner (IP)?
A. A licensed Insolvency Practitioner is a person (often an accountant or solicitor) who has the experience and qualifications to act in formal insolvency cases.

Your IP is responsible for presenting your IVA to your creditors and ensuring that it takes into account their interests as well as yours.

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3. How do I set up an IVA?
When you contact All About Money, we'll go over your financial situation with you and recommend the debt solution which is best suited to your individual needs. If that turns out to be an IVA, we'll ask you to supply us with specific details so we can draw up an IVA proposal which we think your creditors will accept, based on how much as you can afford every month once you've allowed for your living expenses and secured debts.

Next, we send the proposal to your unsecured creditors, so they can see how much money they would recover through an IVA. At the Creditors' Meeting, they can accept it, reject it or request changes to it.

If it is accepted, the IVA can officially start - your creditors are then legally bound by it, so as long as you uphold your side of the agreement, they cannot change their minds or go back on any part of the agreement.

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4. Do all my creditors have to agree to an IVA?
A. No. When the Creditors' Meeting takes place, your IVA proposal must be accepted by voters who collectively 'own' 75% of your debt. If this happens, even the creditors who vote against it or do not vote at all will be bound by it.

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5. Do I have to attend the creditors' meeting?
A. No. However, you should make sure you're reachable by phone, so you can consider any requested changes to the proposal immediately.

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6. What makes an IVA a good solution to my debts?
A. An IVA is not the right solution for everyone with debts - but for people who have substantial debt and are having problems making their monthly payments, it can be an excellent solution.

For most people in this situation, the most appealing benefits of an IVA would be:

  1. Prevent legal action from creditors
  2. Potential to write off a percentage of the debt they can't afford to repay once the IVA has successfully completed
  3. Manageable monthly repayments
  4. Have a clear date by which they know they will have repaid their debts

Plus, it avoids many of the disadvantages associated with bankruptcy. Homeowners, for example, will probably have to release some of the equity in their home, but not sell it. There's also no court process involved, and an IVA won't appear in the papers or disqualify them from certain jobs in the way bankruptcy does.

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7. Why would my creditors accept an IVA?
A. Even if it means they'll write off some of your debt, an IVA will also mean they can count on receiving the remainder - which should be more than they would receive if they pursued an alternative such as bankruptcy.

They also know that the Insolvency Practitioner (IP) will examine your finances closely and ensure that the IVA is fair to them as well as to you. And finally, an IVA avoids the need for expensive, time- consuming legal action.

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8. How much will it cost me?
A. The monthly cost of an IVA is different in each case, as it depends on how much you have available on a monthly basis once you've allowed for your secured debts and living expenses (note that you may be expected to cut back on your non-essential spending if your lenders think you're spending too much in some areas).

The IVA fees will be taken from the payments you make. And before anyone commits themselves to the IVA, everyone involved (you and all your creditors) will know exactly how much they'll pay or receive during the IVA.

We are committed to being totally clear about all fees and charges, and to providing a service which is fair to both you and your creditors.

Click here to find out more about our fees

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9. What if I can't make my payments?
A. As part of the service we provide, we will review your monthly payments on a regular basis to check that they are still manageable. If you are no longer able to meet your payments, this can threaten the success of your IVA, and can even lead to you being made bankrupt. If you are finding it hard to make your payments, we will try to renegotiate lower payments with your creditors, although they are not obliged to accept this.

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10. What will happen at the end of the IVA?
A. Whatever payments you make during the IVA are considered to be in full and final settlement of your debts.

In other words, once your IVA has come to a successful conclusion, your unsecured debts WILL be cleared and all creditors involved in the agreement will have no further claim against you.

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11. I'm a homeowner - what will happen to my home?
A. Your IVA will affect your credit rating, making it more difficult to obtain credit - and if you are able to obtain credit, you may have to pay a higher rate of interest. You may be required to release some of the equity in your home, to increase the amount you can pay your creditors. If you're unable to remortgage at all, your IVA might be extended by up to 12 months. But you are extremely unlikely to lose your home.

In fact, an IVA does not affect secured debts at all. Once you start making payments to the IVA, you will stop paying your unsecured creditors, but must continue paying for your mortgage and any secured debts you may have.

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12. Is there a professional body?
A. Our IPs are licensed either by the Insolvency Service (part of the Department of Trade and Industry) or by the Institute of Chartered Accountants in England and Wales (ICAEW), and are members of the Association of Business Recovery Professionals (known as R3).

All licensing and professional bodies provide strict technical, professional and ethical guidelines. For more information, visit the Insolvency Service website: www.insolvency.gov.uk.

Get expert IVA adviceIf you would like more information, talk to our team today.

Speak to an expert debt adviser on:0800 195 2911

Apply for help online

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Subject to eligibility and acceptance. Fees Payable. Debt write off applies only to unsecured debts and on completion of an IVA, alternative solutions may be offered. If your IVA fails, it could lead to Bankruptcy. Your ability to obtain credit will be affected for 6 years. Homeowners may be required to release the equity in their property. Calls may be recorded. Calls to 0800 numbers from BT landlines are usually free, calls from other networks may vary and you should check with your network provider for full details of your service.

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