IVA Debt Advice

An Individual Voluntary Arrangement, also known as an IVA is a debt solution for people based in England, Wales and Northern Ireland. The Scottish equivalent is a Protected Trust Deed Scotland. An IVA enables people with debts above £12,500 to put a proposal to their creditors, which if accepted, will mean you only repay what you can afford.

An IVA is an alternative solution to Bankruptcy.

An IVA is a regulated solution requiring an Insolvency Practitioner to administer the arrangement. You would make an affordable monthly repayment usually for 5 years. After which, any remaining debt will be cleared (as long as you have complied with the terms of your agreement).

Take the debt analyser today to find out if an IVA is suitable for you.

Benefits of an IVA

1. Your IVA would be legally binding meaning no further charges or interest could be added. It also means your creditors are not able to change their mind if they agree to your proposal
2. You will only be asked to make affordable repayments
3. An IVA enables a professional person (doctor, accountant, solicitor etc) to continue to practice whilst resolving their debt problem. Bankruptcy may affect their professional status. You may have to check your employment contract to ensure you can enter an IVA
4. You are likely to be able to keep your home within an IVA, usually the Insolvency Practitioner will only be interested in any equity
5. You would face fewer restrictions entering an IVA compared to bankruptcy

Negatives of an IVA

1. Any available equity in your house or other asset would be considered.
2. An IVA is legally binding so defaulting on the agreement would result in your IVA failing, which could mean your creditors will proceed with bankruptcy
3. Your income and expenditure will be reviewed on a frequent basis which can mean your monthly contribution could fluctuate up as well as down
4. Your IVA would be noted within your credit file. The default on your credit file will last for 6 years in total from the date it was applied
5. An IVA usually lasts for 5 years, whereas Bankruptcy would only last for 1
   year. An income payment order in Bankruptcy could last for 3 years
6. A remortgage is likely to be on less favourable terms and if you are unable to gain a remortgage your IVA may be extended for up to 12 months
7. An IVA will affect your credit rating for six years.

Criteria to enter an IVA

- Unsecured debt must be £12,500 or over

- You must have a monthly disposable income of £200 or greater

- You must live in England, Wales or Northern Ireland

Fees associated to the IVA

An IVA is administered by a licensed Insolvency Practitioner and their team. An Insolvency Practitioner will receive a fee for acting as your nominee and supervisor. These fees are paid separately. The insolvency practitioner will also charge for additional expenses.

If an IVA is the correct debt solution for you and you wish to proceed, we can introduce you to one of our panel reviewed companies. If we help gather your documentation and complete the fact find pack to send to the insolvency practitioner we would be acting as their agent, completing work on the insolvency practitioner's behalf. The fee we would receive from the insolvency practitioner is 50% of the nominee fee if your case was accepted at the creditors meeting.

The fees charged by the insolvency company are outlined below.

Nominee fee

The nominee fee is paid to cover work carried out to put your proposal to your creditors. A licensed insolvency practitioner is required to review your IVA proposal prior to presenting it to your creditors. The insolvency practitioner will provide a report to advise whether they believe the IVA will be successful.

The nominee fee will cover this work and drafting your IVA proposal, collating information regarding your creditor claims and giving notice of and holding a meeting of creditors.

The insolvency practitioner will be paid the nominee fee from the first payments you make into your IVA. This means your creditors will not be paid immediately and your account will go into arrears. If your account was in arrears already then you will go further into arrears.

Supervisor's fee

The supervisor's fee will typically last for 5 years and cover the ongoing costs to maintain and support your IVA until it has concluded. This would involve completing annual reviews of your IVA, providing reports to your creditors, distributing payments to your creditors and resolving any issues that arise during your IVA as a result of your financial situation changing.

Each insolvency practitioner will have their own fee structure for an IVA and it is typically decided on a case by case basis depending on the complexity of the IVA.

Once your insolvency practitioner has made the proposal to your creditors, they will have to vote on the agreement, including the fee charged by the insolvency practitioner. 75% of the people voting at the meeting must approve it before it is accepted.

An example of fees charged by a licensed insolvency practitioner is below

• Nominee fee - £1,250
• Supervisor fee (over 60 months) - £2,475
• Expenses - £290
• VAT - £750
• Typical monthly payment - £300
• Total paid by individual - £18,000
• Amount owing at the beginning of the IVA - £31,000
• Net paid to creditors - £13,235 (43%)
• Amount written off at the end of the IVA - £17,765 (57%)

Example based on a typical client - with unsecured debts of around £31,000 who has no equity in any property and completes a 5 year IVA.