Your Apply for an IVA Check in 1-2-3 Easy Steps
We’ll handle your enquiry with care and sensitivity
1 – Get in Touch
We’ll ask you about your debts and financial situation. (20-30 mins)
2 – Application
If suitable, we’ll prepare an IVA proposal for your creditors on your behalf.
3 – Acceptance
You get affordable payments, interest on debts stopped and creditor protection.
Eligibility Check
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We will not charge a fee for providing initial advice. If you decide an IVA is the right solution for you, fees and charges will form part of your affordable monthly repayment which is agreed with your creditors
See IVA fees and costs.
- A single, lower payment
Repayments based on what you can afford – not what you owe - Stop interest on your debts
Stop interest accumulating on your debt now - Debts written off
You could write off debt you cannot afford - Stop creditor action
Stop creditor letters and bailiffs attending your home
What is an IVA?
An Individual Voluntary Arrangement (IVA), is a legally binding agreement with your creditors to pay back all or a percentage of your debts over a set period. The agreement will be based on an affordable rate that you (the debtor) can realistically pay. For many people, an IVA is a suitable formal alternative to bankruptcy.
An IVA must be arranged by a qualified and certified professional, called an ‘Insolvency Practitioner’ (IP) for it to be legally recognised. The Insolvency Practitioner will work with you to assess your finances and determine what you are able to pay back. They can then create a payment plan that works for you and your creditors. This usually consists of monthly payments for the duration of the IVA, but may also include a lump sum or a combination of both. The monthly payments on an IVA will typically last 5 or 6 years, depending on the amount owed, any lump sums paid, and the size of the monthly payments.
The principle of an IVA is that you only pay back what you can reasonably afford to. This means that in many cases people will pay back significantly less than the total they owe. The amount you are realistically able to pay each month will be calculated between you and the IP and this will form the basis of your financial offer (proposal) to your creditors. On top of this individuals subject to IVAs may also be expected to pay into their IVA any unexpected windfalls, or increase their monthly payments in the event that their circumstances improve.
Am I Eligible For An IVA?
Your Insolvency Practitioner will assess your case and determine whether you and your creditors would benefit from an IVA or if alternative debt management strategies would be more effective. In most cases, Insolvency Practitioners will use a similar set of criteria to decide. In order to qualify for an IVA you must:
- Owe at least £5,000
- Have 3 lines of credit with at least 2 creditors (all debts must be in the same name)
- Be insolvent (unable to pay the money you owe)
- Have a regular source of income
- Live in England, Wales, or Northern Ireland (there are slight variations in Scotland)
How an IVA works
The IVA process begins with a review of your financial situation. Our team will conduct a full review of your circumstances, compiling an accurate list of your creditors and how much you owe them. They will also assess your income and your expenditure to determine what you can realistically afford to pay back each month. If an IVA is not suitable we can discuss alternative options. But if we decide that an IVA is suitable, we can get in touch with your creditors and make a formal IVA proposal to them on your behalf.
Your proposal to creditors will state how much you are likely to pay back, what the monthly payments will be, and whether any lump sums will be paid. They then have a chance to respond and decide whether they accept the terms or not. The value of each creditor’s vote is determined by the value of the debt that is owed to them. If 75% of voting creditors (by value) approve the proposal, the IVA can go ahead and you can begin making monthly payments. Once the IVA has been accepted, all interest and additional charges on your debts are frozen immediately and your monthly payments will begin.
You will not be charged an upfront fee for setting up your IVA. There are fees incorporated into the agreement, these are laid out to your creditors in the proposal, and you pay them back as part of your affordable monthly repayment.
You will no longer pay money directly to your creditors and they are no longer allowed to chase you for payment. Instead, you will pay the agreed monthly payment to the IVA provider, who will then pass on the correct amount to your creditors (as per the terms of the arrangement). In effect, your debts are simplified into one monthly payment and as long as you adhere to your obligations within the proposal, then the IVA will complete within the agreed timescale.
What debts can be covered by an IVA?
An IVA covers a range of debts from different creditors, but there are some exceptions. Most common forms of unsecured debts can be covered by an IVA. These include:
- Credit Cards
- Personal Loans
- Bank Overdrafts
- Gas and Electric Arrears
- Previous Council Tax Arrears
- National Insurance Arrears
- Tax Credit Overpayments
- Catalogues
- Store Cards
- Water Arrears
- Payday Loans
What debts are excluded from an IVA?
Although most forms of debt can be covered by an IVA, there are some that cannot. If you are struggling to repay these kinds of debts, you will need to consider other options, such as bankruptcy. Below are examples of debts that are excluded from an IVA:
- Maintenance Arrears
- Child Payment Arrears
- Court Fines
- Hire Purchase Schemes
- Student Loans
- Mortgages
The Advantages of an IVA
If you are having difficulty managing large debts and high-interest payments are absorbing a lot of your money each month, an IVA could be the right solution. Instead of paying multiple high-interest debts to different creditors, you can combine all of your unsecured debts into one manageable monthly payment. In most cases, you can write off a portion of the debt that you owe.
There are a number of significant benefits to an IVA, which could make it a better choice than other debt management strategies.
You get protection from unsecured creditors so they cannot take further legal action to enforce their debt such as, applying for charging orders.
Creditors are no longer allowed to call you or send letters demanding payment to your home.
In many cases, your creditors will agree to write off a portion of your debt, saving you a lot of money. The interest payments and charges on the debts will also stop immediately once the IVA is approved.
Monthly payments are based on what you can afford. One simple monthly payment is far easier to manage than multiple payments to creditors.
The Disdvantages of an IVA
You will be expected to adhere to expenditure guidelines
Your creditors can decline your IVA proposal
An IVA will be recorded on your credit file for 6 years from the date it is approved
Your IVA will be recorded on the Insolvency Register which is publicly available information
How to apply for an IVA
If you want to apply for an IVA, you should first seek some expert financial advice. It’s our promise, that we can help you to decide on whether an IVA is the right choice for you. If it is, we can talk you through the application process so you know what is expected of you. This will include creating a proposal outlining what you are able to pay each month. This proposal is based on your financial situation and the money that you owe and is designed to be beneficial to both you and your creditors.
Once the proposal is finalised, your IVA provider will present it to your creditors. They will then have time to look over it and vote on whether they approve it or not. Usually, the entire application process takes no more than 3 weeks before you get your final decision.
How much debt can be written off with an IVA?
Debt write-off occurs at the end of the IVA once you have fully complied with it’s Terms and made all of the payments expected of you. The amount written off is therefore dependent upon your particular circumstances; accounting for the total debts you originally owed, all monies paid in and the associated costs of the arrangement. An estimate of the amount of debt write off that will be achieved will be contained with your proposal.
What if my IVA is rejected?
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If your proposal is rejected, there are other financial solutions available to you, though these are dependent on your circumstances. Other options include:
Are IVAs usually accepted?
Your creditors are not guaranteed to approve your IVA and if they don’t approve it, you will need to consider other options, such as bankruptcy or a debt management plan. However, your Insolvency Practitioner will only recommend an IVA and move forward with the proposal process if they think that there is a high likelihood of it being accepted. Before recommending an IVA, we will carry out an in-depth review of your financial situation and assess the debts that you owe. Using our experience, we can determine whether you are likely to be accepted or not and whether an IVA is the right option for your specific circumstances.
All of the detailed assessments of your finances will be used to inform the proposal that is put forward to creditors. We will always ensure that it is as accurate and realistic as possible, so it is favourable to everybody involved and, therefore, more likely to be accepted by creditors. However, the success of your proposal is dependent on the information you provide to your Insolvency Practitioner. It is crucial that you work with them and give them a completely honest, factual representation of your finances. Failing to give all of the information or attempting to give false information about your situation will only hurt your application and increase the chances of your proposal being rejected. If creditors believe that there are inaccuracies in the proposal, they are highly likely to reject it. We can advise on this before you Apply for an IVA.
Will an IVA affect my bank account?
You must include all debts on your IVA proposal and, in some cases, this can impact your bank account. If you have debts with the bank, including overdrafts, or other lines of credit such as credit cards, the bank may decide to freeze your account.
Banks monitor the public insolvency registers and they may put a hold on your account to protect money in case they need to pay it to your IVA provider. In some instances, your bank may decide to close your account down altogether. Whether your bank is frozen or closed down, you will be unable to access any of the money or use it to pay any bills, so this can leave you in a difficult situation.
If you have multiple accounts with the same bank and you owe debts on one of them, the bank may move money between accounts. For example, if you have a loan with a bank and you cannot afford to pay it, the bank can take money from your current account to pay the balance. This is known as ‘setting-off’. Again, this can leave you in a situation where you are unable to pay important bills from your current account.
Switching your bank account before your IVA is proposed can help you protect your income and avoid any issues. Switching is usually a quick and easy process but you need to check the eligibility criteria when choosing a new account. Don’t choose a bank that you already have debts with, and read the fine print to ensure that you are still able to use the account if you enter an IVA.
Will an IVA stop bailiffs?
When you are unable to pay your debts, creditors can apply to courts for bailiff permission. If approved, bailiffs can enter your property and take possessions to cover the money that you owe. However, as soon as an IVA is approved, all court actions for applicable debts can be paused, and this includes bailiff warrants.
Bailiffs are still legally allowed to visit your home while you are going through the IVA application process. You do have the right to request that they put the account on hold while the application is being considered but you do not have any legal protection until your creditors have approved the IVA. If you are concerned about bailiffs, talk to us today so that we can assess your circumstances and start the IVA application process off as soon as possible.
Can I cancel my IVA at any time?
You are able to withdraw your IVA application right up until the day it is approved. If you want to do this, speak to your IVA provider and they can action the request. You can still request termination of the IVA after it has been approved but the process is longer. First, you must make a written request to the Supervisor of your IVA. They can then issue a ‘Certificate of Termination’ but they may not do this immediately. Often, they will wait until administration of the estate has been completed before they terminate the IVA.
Before cancelling your IVA, you should always discuss your reasoning with the Supervisor. If you are having difficulty making the payments or there are short-term financial pressures, you can alter your IVA. An IVA is a flexible formal solution, which allows for Payment Breaks or other changes to the proposal. In most cases, revising the IVA is a better option than cancelling it altogether.
Which is the best solution for me – IVA or Bankruptcy?
When deciding between Apply for an IVA or bankruptcy, the best solution for you depends on your personal circumstances. However, here are some of the key features of both solutions and how they compare:
- Typical Duration – an IVA is a 60 or 72 month agreement. You will be discharged from a Bankruptcy after 12 months, in most cases. However, if you are able to afford it, you may have to continue paying into your bankruptcy for 3 years. Although an IVA is longer, there are other benefits compared with bankruptcy.
- Application Costs – There is typically no upfront cost when applying for an IVA. There is an upfront cost of £680 before you can apply for bankruptcy, however this is payable in instalments.
- Fees – in both solutions fees can vary and are satisfied out of asset realisations made.
- Debt Write-Off – In most cases, you will pay less money back through a Bankruptcy than you will through an IVA. The amount that is written off by an IVA is dependent on your personal situation, so you are not guaranteed to have any of the debt written off.
- Assets – With an IVA you can request your assets to be excluded, subject to your creditors’ approval. All legal actions pertaining to the debts will also be frozen, so bailiffs are unable to repossess anything. In a Bankruptcy any assets outside of exempt property (i.e. assets of a reasonable value to meet your domestic needs or essential work items such as trade tools) will be included. So, even though you pay back less and it is a quicker process, bankruptcy comes with much greater risks to your assets.
- Effect On Credit File – Both solutions will be recorded on your credit file. Bankruptcy and an IVA will show up on your credit report for 6 years. Both will impact your credit score, but you can work to rebuild it once your bankruptcy or IVA is finished.
If you are considering either of these options we recommend that you contact us if you consider to apply for an IVA. We will carry out a thorough assessment of your circumstances and provide you with information on these and other financial solutions, so you can make an informed decision about your best option.
Frequently Asked Questions
Will an IVA affect my credit rating?
An IVA is registered on your credit file for 6 years from the date of approval.
Can an IVA affect my job?
Usually, an IVA will not affect your job, but there are some exceptions. Certain professions, like solicitors or accountants, have rules about working with an IVA and you may not be able to practice. In some cases, you can continue practising but you will be subject to certain conditions. If you are concerned about your IVA impacting your job, read through your employment contract and look for any clauses about working with an IVA.
Will an IVA affect my partner?
No, an IVA is an individual agreement, meaning that it only concerns one person. This applies even if you are married or living together. However, when assessing your finances and drawing up the proposal, your Insolvency Practitioner will consider your partner’s financial contributions.
Can I get a mortgage with an IVA?
Yes, you can still apply for a mortgage with an IVA, but there are challenges. Firstly, your credit rating will be affected, which limits your loan options and means you are likely to be offered a higher interest rate. If you already have a mortgage when you apply for an IVA, your Insolvency Practitioner will take this into account. If you do need to take out a mortgage when you are on an IVA, you need permission from your Insolvency Practitioner. You have to get their permission to take out any new credit over £500, including a mortgage. They will assess your situation and if they think you can afford it, they will grant your request to take out a mortgage.
Can I get a remortgage with an IVA?
If you are a homeowner you may be expected to remortgage your home and release equity to pay towards your debts. This happens towards the end of your IVA – usually six months before it finishes.
Your ability to remortgage will ultimately be decided by whether or not you meet the secured lending criteria of any potential mortgage lenders at the time.
Will an IVA affect my business?
One of the biggest benefits of an IVA is that you can keep your business open and trading, which may not be allowed with other formal debt solutions. If you declare bankruptcy, for example, you are banned from being the director of a limited company.
Can I start a business whilst in an IVA?
There are no restrictions about registering a company or setting up as a sole trader while you are in an IVA. However, it is important that you are still able to make your monthly payments, so any changes to your employment status and income are a risk.
Can I pay my IVA off early?
Yes – if at any point during an IVA you are in a position to pay in sufficient funds to achieve complete settlement of your outstanding debts then you should contact your IVA provider who will advise you of the amount you need to pay and after distributing the appropriate money to your creditors will complete the arrangement early.
If a family member or friend offers you money as a gift to pay off your IVA early, they will need to provide ID and some details about themselves. All lump sums must be verified to ensure that they come from legitimate sources before they can be used to pay off your IVA early.
It may also be possible for your IVA to complete early even without paying your creditors off in full. Any offers of early settlement where creditors won’t be getting all of their money back will need to be put to them so they can decide on whether they choose to accept it. Your Insolvency Practitioner will do this on your behalf.