An Individual Voluntary Agreement (IVA) is a contractual agreement with the people that you owe money to (your creditors), assuring them that a certain level of debt repayment will be maintained over the life of the agreement. An IVA is a legally binding alternative to bankruptcy, and should enable your creditors to reclaim a greater proportion of your debt than if you had declared yourself bankrupt. An IVA is only available to residents of England and Wales, and the Scottish equivalent is known as a Trust Deed, which differs only from an IVA in the length of the agreement (3, rather than 5 years as standard) and the minimum debt amount accepted (£10,000 as opposed to £15,000). Wherever in the UK you live, you can request a confidential call from a debt specialist by filling out our short form.
IVAs should not be confused with the many commercial debt management and consolidation services advertised in the media. It is instead a formal repayment proposal presented to someone’s creditors by an Insolvency Practitioner. An IVA is a completely confidential way to decrease, and eventually eliminate, your outstanding debt. Only you, the Insolvency Practitioner managing your IVA programme, and your existing creditors will know about your agreement, so you'll be able to keep your job secure, take out a new mortgage, and maintain your reputation. If you find yourself in a serious debt situation, research and consider an IVA with the articles and tools available at SimplyFinance.
Reasons for an IVA
- If you're under pressure from debt collectors and creditors, and they are demanding or threatening to take legal action.
- If you're struggling to make minimum payments with either a personal loan debt, credit card debt, bank overdrafts, store cards or catalogues.
- If your debt is £12,000 or more and becoming unmanageable.
- If the worry of your debt is beginning to affect the rest of your life.
Key Points
An IVA (Individual Voluntary Arrangement) is a legally binding agreement that protects you against any future action from creditors. This is done by having your interest frozen and, possibly, a significant amount of the debt written off. It can be an attractive alternative when choosing how you want to clear your debt problems.
An IVA is arranged between you and the people you owe money to, and it takes place over a fixed period, usually five years. IVAs are becoming increasingly popular in Britain amongst those who are struggling to keep up with their repayments. They offer a very useful and real alternative to bankruptcy, especially among creditors as they generally stand to recoup more of their money with an IVA than they would from bankruptcy.
Typically, an IVA agreement will see a creditor agree to write off a proportion of the debt owed to them. In return you agree to pay a fixed proportion of your monthly income towards the debt for a period of five years.*
* fixed repayment period (typically 60 months)
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Jasmine Birtles, Founder, MoneyMagpie.com