What Is an IVA
An IVA, or Individual Voluntary Arrangement to give it its full title, is a formal debt solution available in the United Kingdom, which offers people with serious unsecured debt problems an alternative to bankruptcy.
An IVA is a legally binding agreement, which can only be arranged and administered by a licensed Insolvency Practitioner, and IVAs were introduced as part of the ‘1986 Insolvency Act’ to help people whose assets and incomes may have been put at risk if they declared themselves bankrupt.
IVA’s generally have a fixed repayment term of 5 years, and during which time the debtor is required to follow the agreed repayment schedule set out in the IVA proposal. At the end of the 5th year the debtor is considered debt free, even though the original debt may not have been fully repaid.
All IVA’s work on the understanding that the debtor will only be required to repay what they can reasonably afford, once their day to day living expenses have been deducted from income and, because an IVA is a legally binding arrangement, once it has been agreed the creditors cannot simply change their minds and ask for increases in the repayment schedule.
Other advantages of an IVA include:
- Repayments are based on affordability.
- Legally binding on all creditors.
- Fixed repayment term of 5 years.
- Guaranteed write-off of any outstanding debts and the end of the IVA.
- No further legal action can be taken against the debtor.
- Protects equity and assets from creditors.
- Protects professionals for whom Bankruptcy is not an option
- Guaranteed freeze of interest on all debts.
- No late payment charges.