What is an IVA?
IVA stands for Individual Voluntary Arrangement. It is a formal agreement you make with the companies that you owe money to which will benefit you both. It will usually last for 5 years. When the 5 years is finished, you will be completely debt free. The main benefits of an IVA are:
- Pay one low monthly payment
- You will avoid bankruptcy
- The people you owe money to are not allowed to contact you
- Bailiffs will no longer be allowed to visit your home
- The interest and charges on your debts will stop
- You car is often not affected
- You will be able to stay in your home
Am I eligible?
To qualify for an arrangement you will need to fit into a certain criteria. You will have to:
- Have £5000 or more debt
- To be a UK resident
- Owe money to 2 or more people
- Have a regular income
- Be willing to pay at least £70 into your arrangement
Apply for an IVA
It has never been easier to apply for an arrangement. Follow our 4 easy steps to apply:
- Check you are eligible by using our free IVA calculator by clicking here. This useful tool will run through all of the basic qualifying questions to make sure you qualify for a debt solution.
- Now that you know that you qualify, our professionally trained advisors will contact you to offer you free debt advice.
- A proposal will be created for you to consider.
- You accept your proposal and it is then passed on to an insolvency practitioner so you can enter into an IVA. You will make low monthly repayments into your debt plan and you will start to make low monthly repayments.
What debts can go into an arrangement?
The main debts which go into legislated debt solutions are unsecured debt. Some examples of unsecured debts are:
- Credit cards
- Overdraft debts
- Unsecured loans
- Payday loans
- Council tax debts
- Old mortgage debts
- Old rent arrears
- HMRC debts
- Bank debts
- Overpaid benefits
- Other unsecured debts
Debt Tip – If you are based in Scotland, you will need to apply for a Scottish Trust Deed.
Free IVA advice
Our friendly advisors are here to help. They are experts in debt advice and will help you to tackle your debt problems quickly, empathetically and confidentially. When you speak to your advisor to process your application, they will need to see the following information to assess your current financial position.
- Your last 6 months bank account statements
- Your last 3 payslips
- Details of your outstanding debts such as credit card statements, mortgage statements, council tax bills etc
- Identification such as driving license, passport or other official government documents
If you are ready to go ahead, you can apply for an IVA online today.
How much does an IVA cost?
When you use Get out of Debt Free you will never have to pay upfront to take out a debt management solution. All insolvency practitioners charge a cost for their services, this includes all “charities” which claim to be completely free. All of your debt is written into your arrangement, no matter which IVA company you choose. The insolvency practitioner fee will not need to be paid in a lump sum, it will be spread evenly over 60 monthly payments within your monthly payment.
Will it affect my credit rating?
IVA debt will affect your credit scoring in a negative way. The arrangement will often last for 5 years (60 months) and you will be able to rebuild your credit rating 12 months after the arrangement has completed. When you are in your debt arrangement you will not be permitted to take out any more credit, until it has completely finished. IVA debt is a formal arrangement and your name will be added to the insolvency register.
Assessing your circumstances
Your advisor will need to make sure that your arrangement is 100% suitable for your situation.
Your advisor will total up all of your monthly costs and make sure you have adequate allowances for food, entertainment, childcare, rent/mortgage payments, council tax, travel costs etc. They will then deduct your total expenditure from your total income and this will leave you with a disposable income. This disposable income should be used towards your arrangement. The minimum disposable income that insolvency practitioners usually look for is £70 per month.
Your advisor will need to know exactly how much money you earn after tax on a monthly basis. They will include all commissions/bonuses.
If you have a mortgage on a house and you have positive equity, your insolvency practitioner may want you to use this to make a one off payment towards your IVA. If you rent, you will have no equity so this wouldn’t be considered.
You will be able to keep a car even though you have an IVA, although if you have a very expensive car or pay a very high monthly payment you may be asked to downgrade this.