Benefits of Individual Voluntary Agreement (IVA)

If you’re facing serious debt problems and want to avoid bankruptcy, an Individual Voluntary Arrangement (IVA) could be a practical and legally binding solution. IVAs offer structured debt relief while allowing you to retain some control over your finances. Here’s what you need to know about the benefits—and some key considerations—of entering into an IVA.

What Is an IVA?

An Individual Voluntary Arrangement is a formal agreement between you and your creditors to repay a portion of your debts over a set period—typically five to six years. Arranged and managed by a licensed Insolvency Practitioner (IP), the IVA allows you to make affordable monthly payments based on your income and expenditure.

Key Benefits of an IVA

1. Legal Protection from Creditors

• All interest and charges on your debts are frozen.
• Creditors can no longer pursue legal action or contact you directly for repayment.

2. Affordable Repayments

• Your monthly payments are based on what you can realistically afford after essential expenses.
• Payments can be adjusted if your income increases or decreases.

3. Debt Write-Off

At the end of the IVA, any remaining unsecured debt is typically written off, provided you’ve met the agreed terms.

4. Protecting Your Assets

• You can usually keep your home, although you may need to remortgage in the final year to release equity.
• Essential possessions, such as your car, are often excluded from the IVA.

5. Professional Guidance

A licensed Insolvency Practitioner will manage the entire process, offering professional support and ensuring your agreement is legally sound.

Considerations Before Entering an IVA

1. Not All Applications Are Accepted

Creditors representing at least 75% of your total debt must approve the proposal. If rejected, other debt solutions may be necessary.

2. Commitment Required

You’ll need to commit to a 5-6 year plan. Failure to make repayments could lead to the IVA failing and result in bankruptcy.

3. Impact on Credit Rating

An IVA remains on your credit file for six years, affecting your ability to get credit or loans.

4. Professional Restrictions

Certain professions (e.g., legal or financial) may restrict participation in IVAs. Check with your employer or professional body before proceeding.

Is an IVA Right for You?

To decide if an IVA might be right for you, you’ll need to check:

• You have over £10,000 in unsecured debt.
• You owe money to multiple creditors.
• You have a regular income and can commit to monthly payments.
• Bankruptcy would severely impact your life or career.

Always explore alternative options such as debt management plans, debt relief orders, or bankruptcy before deciding.

Speak to an Expert

Choosing the right debt solution can be life-changing. At Irwin Insolvency, our licensed Insolvency Practitioners offer free, confidential advice to help you make the best decision.

📞 Call us now on 0800 254 5122
💬 Or send us a message here

Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Always consult a qualified professional before taking action.