If you’re thinking of going into an Individual Voluntary Arrangement (‘IVA’) then it’s likely you’ll be on a fact-finding exercise to learn a little bit more.
In this article we take a look at 10 facts about IVA’s to lend you a helping hand.
- Unlike other repayment options, an IVA only runs for a fixed term. Typically this is either 4 or 5 years. This means that you’ll know exactly when the IVA will come to an end and when you’ll be able to stop making repayments under it. This can be ideal for those looking to improve their financial future. In fact, at the end of the arrangement, many use the same monthly amount to start saving through ISA’s and so on.
- At the end of your IVA any remaining debts will simply be written off. So, even if you’ve not completely repaid everything, you won’t have to worry about finding the remaining balance – nor can your creditors pursue you for it.
- The amount you pay each month is intended to be affordable based on your income and outgoings. The intended amount will be carefully calculated by your Insolvency Practitioner before a formal proposal is put forward to your creditors.
- Only unsecured debts can be incorporated into an IVA. You’ll also be unable to include any child maintenance arrears, student loans or debts incurred through fraudulent means.
- If you have debts over £10,000.00 then an IVA can be a much better solution than bankruptcy. It would make sense to work out the IVA pros and cons to see if this is the case for you. There are lots of reasons for this – including the fact that you won’t usually have to declare it to your employer and you can still use your bank account (without informing your bank of the IVA arrangement).
- Once you enter into an IVA then your creditors can no longer take any legal action from you. This means that all phone calls, correspondence and even home visits will cease with immediate effect – even after the IVA ends.
- An IVA is a formal alternative to bankruptcy. What’s more, if your creditors try to make you bankrupt then you can usually avoid this by entering into an IVA instead.
- IVA’s are private arrangements and (unlike bankruptcy) are not entered in the press in the same way that they used to be. Whilst details of your IVA will appear on a public online register (The Insolvency Register) you’re not legally obliged to tell anyone about it and it’s highly unlikely to be discovered by others.
- Only a licensed Insolvency Practitioner can administer an IVA – you can’t enter into one yourself. It’s therefore important to shop around and find the best one. After all, you’ll need to stay in touch with them for the next 4/5 years.
- Contrary to popular belief, you shouldn’t be required to sell your home under the terms of an IVA. However, if you have sufficient equity in it (usually £5,000.00 or more) then you may be required to re-mortgage it during the last year of your IVA.
Rachel Slifka is a freelance writer and human resources professional. She is passionate about helping fellow millennials find success with their finances and careers. Read more by checking out her website at RachelSlifka.com.