What is an IVA and how does it work ?
An Individual Voluntary Arrangement is a formal agreement between you and your creditors to resolve your debt situation. This can be done in one of two ways – either by a one-off payment that clears your debt or making a single reduced payment each month which lasts for a sensible period of time (often 5 years). Once this agreement is made, creditors are not allowed to add any further interest or charges to your accounts by law. The agreement is fixed – meaning that creditors can not make changes to it. The arrangement is governed by the Insolvency Act of 1986. It is important to understand that an IVA is not a form of bankruptcy. An IVA is specifically designed to avoid the many pitfalls and stigma surrounding bankruptcy.
An IVA is a legally binding agreement which enables an individual, sole trader or partner (the debtor) to reach a compromise with their creditors and avoid the consequences of bankruptcy. It should normally offer a better return to creditors than they could expect under bankruptcy. Most arrangements comprise the debtor making contributions in to the arrangement from future income over a period of time which can be up to 5 years. Sometime the contributions can come from a third party or additional source that would not be available under bankruptcy. An IVA is supervised by a Licensed Insolvency Practitioner and, unlike the unregulated informal debt management products available, is legally binding on all creditors (even those may have been omitted initially due to an honest oversight) and stops them from taking any further action to recover the IVA debts. We would start with a detailed financial fact find to determine your current financial situation and see what level of contribution y
