Individual Voluntary Arrangement (IVA)

An IVA is a legally binding agreement between you and the people you owe money to. It gives you the opportunity to become debt free.

Under the rules and regulations laid down by the Insolvency Act 1986, the Arrangement legally binds all your creditors. The terms of the proposal are tailored to your own personal circumstances, making the Arrangement comfortable and affordable for you.

If the creditors accept your proposal, your IVA will be implemented.

What does an IVA cost?

An IVA is provided to you free of charge. There are no upfront fees and the only money you pay is your monthly payment. The money needed to cover the cost is paid by your creditors from the contributions they are paid.

Different fees apply to different cases. They will be agreed with you and your creditors at a fixed amount at the outset and will be deducted from the payments you make to the arrangement, over the lifetime of your case.

Who is suitable for an IVA?

If you owe more that £15,000 to three or more creditors and you are in employment, an IVA may well be a positive solution for you. Rest assured, if an IVA is not right for you, we will not propose it.

Why would an IVA be good for me?

An IVA is beneficial when creditors are applying too much pressure or when it would take you an unacceptably long time to repay your debts.

People who have benefitted from an IVA often say that one of the best things is that they know exactly when they will finish repaying their debts and because the payment term is fixed. As with so many things, people can cope better if they know they can see the light at the end of the tunnel.

Other advantages include:

• Your monthly payments reduced to a level you can afford.
• A fixed period of payment.
• All creditors are legally bound by the Arrangement so that they are prevented from taking legal action and all contact from them will stop.
• All interest and charges stopped.
• A proportion of your debt is written off.
• No notification to your employer.
• No public notices.
• A private and confidential agreement.

Why would my creditors accept an IVA?

Ramsey Lomax will only propose and IVA debt solution if we believe it is the right solution for you and if we believe it has a very strong chance of being approved. Our experience means we know what makes a good IVA possible and tailored to suit your individual circumstances.

An IVA can produce a better return for your creditors than a bankruptcy and your proposal should demonstrate this. Apart from demonstrating a better return than bankruptcy, your creditors benefit from knowing that the IVA will be monitored and that your finances will be subjected to a disciplined process.

How much debt will be written off?

Every IVA is different. There are no fixed rules regarding the written off amount. How much, in your case, will depend on how much you owe and how much you can afford to repay each month after your individual household expenses.

How much do I have to pay?

Normally creditors expect your IVA proposal to allow you to cover all your essential living costs, leaving only your surplus income to contribute to your IVA.

Can I do an IVA with my partner? (or Spouse)

Yes. If your partner has debts they cannot afford to pay, then this can be taken into account and a “linked” proposal made to all of your combined creditors.

Who monitors my IVA?

An IVA can only be set up with the help of a Licensed Insolvency Practitioner, known as an IP. An IP advises and forms your proposal to take to your creditors and has, at all times, to take your interests and those of your creditors into account. Then, once your IVA is accepted, the IP supervises it for its duration.

Will I have to sell my house?  

A major benefit of and IVA is that your home is protected. In bankruptcy, an asset, especially a house, may be sold to repay some of the money owed to your creditors. This is almost always avoided in an IVA. Instead, if you have some equity in your home, this may well need to be released at some point, just before the end of the IVA by way of a re-mortgage; however, at this stage your IVA contributions may come to an end.

Will my job be affected?

No, not unless you have signed terms and conditions of employment which state otherwise. An IVA is an alternative for many people whose job would be a risk if they were made bankrupt. This would include, but is not limited to, accountants, solicitors, bank workers, police officers and members of the armed forces. Unlike bankruptcy, which is published in the local paper and the London Gazette and IVA is a private and confidential arrangement with your creditors. If you have a partner or are married, it is necessary to tell them about the IVA process you are entering into.

Will I be able to get credit again?

You probably feel you won't ever want credit again at the moment.

However, lenders base their decisions on a credit rating based on your credit history. In most circumstances your credit rating will already have suffered due to your debt problem. During your IVA you should not attempt to obtain credit. Your IVA will remain on your credit history for twelve months following completion of your IVA. Experience shows that people are often able to obtain credit once their debt problem has been dealt with.

What happens if I can't pay my agreed monthly payment?

It is essential that you maintain your payments. If you start to build up arrears of two months or more, your supervising IP may be required to fail your IVA leading to Bankruptcy. However, if something unexpected happens beyond your control, it is possible to arrange for a payment holiday so that your can deal with the problem and get back on track.

Should your situation change during the IVA to the extent that you cannot maintain your IVA as agreed, it is possible to propose what is called a ‘variation' to your creditors.

I am self employed. Can I do an IVA?

Yes. An IVA was originally intended to assist individuals who traded as a business in their own name. If you are self employed you will need to provide copies of accounts to show evidence of your income.

Are there any disadvantages?

An IVA needs commitment and a desire to see it through.

If you own your own home, it is likely you will have to release some of the equity near the end of your IVA.

If you earn extra income, such as overtime or bonuses, you will have to contribute a part of this to your arrangement.

As you are considering an IVA then you are obviously facing financial difficulties which need a solution. In many cases the benefits of an IVA far outweigh other alternatives that are available to you.

Can I do and IVA if legal proceedings are threatened?

An individual who intends to propose an IVA to their creditors may apply to the Court for an interim order which, if granted, halts bankruptcy and other legal proceedings whilst the order is in force.