IVA Application

Individual Voluntary Arrangement - Do You Qualify? - August 2010

With the rapid rise in the amount of lending available during the latter part of the last century and the early part of this came better laws governing consumer credit. Whilst the foundation of the law on lending lies in the Consumer Credit Act it was not until the 1990`s that a more liberal and pragmatic set of laws came into place to handle those borrowers that had problems repaying their obligations.

The principle problem was that those who could not repay either had to enter into some form of voluntary arrangement with lenders and then be at their mercy in terms of not enforcing repossession or bankruptcy.

The development of a whole new debt management regime brought about a transformation in the way borrowers and lenders could manage debt. Whilst voluntary debt management plans are still an effective way of handling small amounts of borrowings, larger sums required a more structured and reliable framework. And so the Individual Voluntary Arrangement (IVA) was created.

An IVA is a legally enforceable arrangement entered into between a borrower and his or her creditors for the repayment of a portion of the debt owed over a fixed term, usually five years. To qualify for an IVA you must have debts in excess of £15,000. An IVA has to be arranged through an authorised insolvency practitioner so first you must find one that offers this service.

They will counsel you on your debt and seek to understand the full extent of your income, assets and debt. Once they have this picture, they will approach all your lenders and seek a reschedule of the repayments to an amount that you can afford to pay. Provided at least 75% of the creditors (by the amount that you owe not the number of lenders) agree then this new payment structure will come into place under a debt management plan managed by your insolvency practitioner. They will charge you a fee but this is also factored into the payment you make. The formal agreement is approved by a court or law and is fully enforceable and cannot be changed except by agreement of all the parties. Provided you make the payments as specified and at the correct times, at the end of the five year term any remaining debt will be written off and you will be able to start with a clean sheet. Your credit history will be adversely affected so borrowing again may be either expensive or limited to a few lenders.

IVA`s have a number of advantages over bankruptcy. First, the mechanism is simple to arrange and is not made public and you may not have to sell your home to raise money although you may have to remortgage. No one need know that you have debt problems unless you tell them. However, should you fail to keep to the terms of the IVA then lenders can petition to have you declared bankrupt and seize all your assets, including your home. Your insolvency practitioner or the Citizens Advice Bureau will also talk to you about arranging a debt consolidation loan before negotiating an IVA since this can also be an effective way of reducing monthly payments on fixed period terms.

IVA Application Form

Fill in the IVA application form in below to start the process for the IVA (Individual Voluntary Arrangement). A senior IVA specialist will contact you at your requested time to discuss your options.