Individual Voluntary Arrangements
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your unsecured creditors, arranged and supervised by a Licensed Insolvency Practitioner (IP). In short you agree to pay back the maximum you can afford over a specified period of time, usually 5 years, at the end of which period your creditors agree to write of any remaining balances.
We will work with you to calculate the maximum monthly payment you are able to make and also assess whether you have anything else you are able to offer to your creditors to enhance the agreement e.g. from the sale of an asset or savings.
At Angel Advance we have an IP who will advise you on the terms of the agreement to maximise the chances of acceptance by your creditors and will assist you in preparing the legal document.
We do not charge you for advice about an IVA or for help with the preparation of the documents. If you are in a debt management plan already it will continue as normal until your IVA has been approved.
We do charge fees for the work both for getting the agreement approved by your creditors and for monitoring it, but these fees are agreed by your creditors and are taken out of the payments made by you once the arrangement has been approved, so you do not pay anything extra to cover the fees. However, the creditors allow us to take our fees before we make payments to them which means that if you did find yourself with sufficient funds to pay your creditors in full, because we take a fee first, you would need to pay our fees in addition to the payments to your creditors.
Is an IVA the right solution for you?
An IVA is a form of insolvency and is a legally binding agreement therefore it is important that you consider whether:
- You feel able to commit to a regular payment for the next 5 years
- You may be able to resolve your financial problems without the need for a formal arrangement e.g. if you are expecting a pay rise or could sell an asset to pay your debts
- You are willing to be open and honest with your creditors about everything that you owe and all of the assets that you have
- You are willing to provide the Insolvency Practitioner with copies of your wage slips or other proof of income each year. A review of income and expenditure is usually a required term of the agreement.
- You are in financial difficulty and cannot make the required payments to your creditors
Advantages
- You will pay an amount that your can afford over a limited period; usually 5 or 6 years
- Provided that you fulfil the terms of your IVA, the remainder of your debts will be written off at the end of the term
- Your creditors cannot pursue you for the debts once the IVA is agreed
- Your creditors cannot apply interest or charges to your debts
- If you are a homeowner, you will usually be able to remain in your home
Disadvantages
- It is a formal agreement; if you fail to keep to your side of the agreement the arrangement may fail and you may find yourself owing as much as you did at the start
- The arrangement must be recorded on the Insolvency Register
- If you have a property, the creditors will expect you to try to remortgage towards the end of the agreement to release funds to be paid in to the IVA. If you are unable to do so the arrangement may be extended for a further 12 months.
- Some debts such as mortgages, secured loans, taxes and fines cannot be included in an IVA so you will remain responsible for paying these
- You cannot take out further borrowing during the course of the arrangement
- If your situation changes for the better you will be expected to pay more to your creditors
- It will be recorded on your credit file and will affect your ability to obtain credit
Frequently Asked Questions
Read some IVA frequently asked questions.