What’s an Individual Voluntary Arrangement (IVA)?

Individual Voluntary Arrangement (IVA) is a statutory contract between you and your creditors that is negotiated, monitored, and administered by an Insolvency Practitioner

How can an IVA benefit you? 

• You only have to pay an agreed percentage of your debt back. You will still be paying part of your debt back with an IVA which will be a higher amount than creditors are likely to receive in bankruptcy.
• You will be free of debt in a set time. In an agreed number of years, you will be debt-free and able to get on with your life.
• Your creditors will stop calling. Once enough of your creditors agree to it – at least 75% in value of the creditors that vote must do so – an IVA is legally binding. That means they cannot take any further legal action or contact you to demand payment.
• You may be asked to re-mortgage 54 months into the IVA; if this is not possible you may be required to extend your IVA by a further 12 months.
• You won’t have to sell your home. However, you could be expected to remortgage and free up some equity for your unsecured creditors – our advisers can explain this in more detail. It’s affordable.
• Your monthly IVA repayments will depend on your specific income and outgoings, meaning it will be an amount you can afford each month.
• The contractual interest and charges on your unsecured debt will be frozen, so you can get on with making payments.
• There is always someone on your side. You will receive support from us throughout the process, meaning you always have someone to discuss any concerns with.


Are there any disadvantages?

• Any debts not bound by your IVA will remain outstanding.
• Your credit file will be affected for a period of 6 years, starting when the IVA is approved your ability to obtain credit will be limited.
• An IVA can impact on certain jobs such as those in finance and the Civil Service if you are unsure check your employment contract.
• You may be asked to re-mortgage 54 months into the IVA; if this is not possible you may be required to extend your IVA by a further 12 months.
• Failure to keep up with IVA payments may result in your creditors filing for your Bankruptcy.
• There are restrictions on certain items of expenditure for a person in an IVA.
• Entering into an IVA, debt relief order or a protected trust deed means that your details will be entered into a public register.

Debts you can’t include in an IVA are:
• Child Maintenance
• Child support deficit
• Student loans
• Magistrates’ court fines
• Secured loans
• Current car/bike finance Mortgage arrears
• Guarantor Loans

Debts, which are considered in an IVA:
• Personal loans
• Store cards
• Payday Loans
• Catalogues
• Debt collectors
• Bailiffs
• Old car finance
• Previous years council tax (subject to area)
• Old utility bills
• Old phone bills
• HMRC Debt

Fees 

There is no upfront cost or fee. If you want to talk about an IVA, the initial consultation is free and comes with no obligation.

However, there are two separate fees payable in an IVA. Both of these fees are paid as part of the Arrangement and are included in the monthly contributions made to the IVA. These fees do not affect the total amount payable, but instead, reduce the final dividend that each creditor receives from the IVA.

The nominee’s fee is a fee charged for the work performed up to the point when the IVA is agreed upon. It is reclaimed from payments into the IVA before any dividend is paid to creditors, it could either be the first five payments into the IVA or £2,000 depending on who your creditors are.

The supervisor’s fee is an ongoing fee for the work performed during an IVA. It is reclaimed from payments into the IVA at regular intervals, as agreed with voting creditors. This could be quarterly or annually depending on the rules stipulated in the individual’s proposal.

Disbursements usually cover expenses your IP pay to third-party companies for software licenses, insurances, or any regulation that is needed. They could also include the cost of additional services hired to offer the best return to creditors.

Please find an example of how the IVA works & what are the associated fees below:

  • Monthly Payment – £120 | Number of Monthly Payments – 60 | Total Paid by You – £7200 
  • Nominee’s Fees – £1200 | Supervisor’s Fees – £1000
  • Total Paid to the Creditors – £5000 | Total Debt Level Included – £15000
  • Total Debts Written Off – £10000 (70.95% of the total Debts)

Note: Your monthly IVA payments may be different from the example provided, it will be based on your circumstances. All the fees will be clearly explained to you in writing.

If you have any questions about this information or anything else, please feel free to contact us at info@nationaldebtsolution.co.uk.

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