An Individual Voluntary Arrangement (IVA) freezes your debts and allows you to pay them back over a set period.
Any money you still owe after this period is then written off.
You can apply for an IVA if you can afford to pay something towards your debts but not necessarily the full amount your creditors want. Typically, this is around £70 a month after you’ve taken care of essential costs, but will vary between IVA providers.
You’ll need to show you have a regular long-term income, as the repayments will usually cover a period over 60 or 72 months (five to six years).
If you have a lump sum to pay towards your debts, you might also qualify for an IVA.
if you’re a homeowner, in the second to last year of the IVA, you might be asked to re-mortgage your house and use the extra funds towards repayment. If you do this, the IVA term would then finish a year early or after you’ve re-mortgaged.
The IVA is set up by a qualified professional called an Insolvency Practitioner. They’ll work with you to put together a proposal to take to your creditors for approval.
It very much depends on what your circumstances are as to whether your creditors will agree to the plan. But if at least 75% of your creditors agree to the proposal, an IVA is likely to be approved – even if some creditors disagree.
An IVA is a legally binding agreement between you and the people you owe money to. This means when you’ve signed it, it can be difficult for you or your creditors to back out. And if you do back out, there are likely to be hefty penalties.