Check If You Qualify For An IVA

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An IVA may not be suitable for all circumstances.
Fees apply.
Monthly payments calculated on affordability.
Entering into an IVA will affect your credit rating. Certain debts cannot be included in an IVA such as hire purchase, student loans, secured debts, full list below.

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Our 3 Step Process

Click “Get Started” above and answer the questions
Speak to an IVA expert to find out if you qualify for an IVA.
If you qualify & want to proceed, we can help you with your IVA proposal.
IVA

Our 3 Step Process

Click “Get Started” above and answer the questions
Speak to an IVA expert to find out if you qualify for an IVA.
If you qualify & want to proceed, we can help you with your IVA proposal.

What is an IVA?

An IVA stands for an Individual Voluntary Arrangement, this is a legally binding agreement between you and your creditors, where you agree to repay what you can afford within a fixed period, usually 5 to 6 years.

An IVA allows you to make one monthly payment to your debts, so keeping on top of things is much simpler. Your personal circumstances will be considered (income/outgoings), and so will your total debt level. Creditors’ approval is required before an IVA can commence. Any remaining balance debt owed to your creditors at the end of the IVA will be written off if it is completed successfully.

A licensed Insolvency Practitioner must act on your behalf and negotiate with your creditors so you don’t have to. During the IVA, your creditors must freeze all interest and charges. If your IVA is approved by your creditors this will require a long and professional relationship which requires you to be transparent and honest, you are required to keep the Insolvency Practitioner updated with any changes.

IVA Eligibility

To be eligible for an IVA, you must:

  • Owe £7,000 or more of unsecured debt (i.e. credit that is not taken out against an asset such as property)
  • Owe this money to two or more creditors
  • Reside in England, Wales or Northern Ireland.
  • Have a steady income which will allow you to make consistent monthly payments of at least £100.

What are the risks and benefits of an IVA?

Risks

  • An IVA will affect your credit rating for 6 years.
  • Your IVA will be shown on the Insolvency Register.
  • You cannot take out further credit whilst you are in the IVA above £500.
  • Only unsecured debts can be included in an IVA.
  • Failure to maintain payments may lead to the IVA being terminated.

Benefits

  • Creditors cannot apply interest and charges following approval.
  • Stops creditors included in the IVA from taking any further action against you.
  • The term of your IVA is a set period.
  • Affordable monthly repayments.
  • The remaining debt included in your IVA is written off at the end.

What Debts can be included in an IVA:

  • Council Tax arrears
  • Credit Cards
  • Payday Loans
  • Overdrafts
  • Store Cards
  • Catalogues
  • Arrears on utility bills, e.g. Gas / Water / Electric bills
  • Money owed to family and friends
  • Personal Debts, e.g. money
  • Unpaid personal VAT bills, Tax and National Insurance
  • Unsecured personal loans
  • Tax credit or benefit overpayments
  • Other outstanding bills, for example solicitor’s costs, invoices for building work and vets bills

Debts that cannot be included in an IVA are:

  • Child Maintenance
  • Mortgages
  • Student Loans
  • TV License Arrears
  • Hire purchase agreements
  • Magistrates’ court fines
  • Secured debts
  • Maintenance arrears that have been ordered by a court
  • Social fund loans
  • TV licence arrears

Can joint debts be included in an IVA:

joint debt is a debt in your name and someone else’s.

Joint debts can be included in an IVA, but:

  • The other person still needs to make their payments.
  • The other person is still liable to pay the whole amount of the joint debt.

It may be helpful for the other person to get seek independent help too.

Comparisons

What is a Debt Management Plan (DMP)

A Debt Management Plan is an informal agreement between you and your creditors to repay your debts. Debt Management Plans can help when you can no longer afford the agreed contractual repayments but you can afford a smaller amount each month.

A Debt Management Plan allows you to pay back the debt with one agreed monthly payment which is distributed between your creditors. There are third party companies that do charge fees for administering a Debt Management Plan.

Advantages of a Debt Management Plan:

  1. It is an informal / flexible plan where you can increase or decrease payments to your creditors dependent upon your circumstances.
  2. Creditors may reduce your repayments and stop interest and charges, but are not obliged to do so.
  3. You make one affordable monthly payment to a Debt Management Company.

Disadvantages of a Debt Management Plan:

  1. Creditors can withdraw from the plan at any time, and the plan offers no legal protection.
  2. There is no guarantee that interest and charges will be frozen however it does happen in the majority of cases.
  3. Your credit rating is affected, as you are not making the contractual monthly repayments.

Individual Voluntary Arrangement and Debt Management Plan Comparison

Individual Voluntary Arrangement Debt Management Plan
Credit rating An IVA is shown on a credit file for a period of 6 years and will affect your credit rating. Creditors will also issue default notices as you are not maintaining your contractual payments which will also your credit rating. Once you enter a Debt Management Plan creditors will issue default notices as you are not maintaining your contractual payments and this will affect your credit rating.
Interest and charges Once an IVA is approved unsecured creditors cannot add any further interest and charges. If you enter into a Debt Management Plan your creditors will usually agree to freeze interest and charges once payment arrangements have been agreed. It is not guaranteed that all  creditors will agree to proposed payment arrangements or to freeze interest and charges.
Term The term of an IVA is usually between 5 and 6 years. The term of a Debt Management Plan varies as it is depends on how long it will take you to repay all your debts in full and this will vary depending upon the monthly payments.
Repayment amount The repayment amount in an IVA is calculated based on affordability following a review of income and expenditure. Monthly payments are required.  Any remaining debt at the end of the arrangement is written off by your creditors. The repayment amount in a Debt Management Plan is calculated based on affordability following a review of income and expenditure. You are required to pay your debts in full.
Creditor agreement 75% of your unsecured creditors (in value) must vote in favour of the IVA for it to be approved. After the IVA is approved all unsecured creditors are included in the IVA even if they did not vote in favour of the IVA. Creditors need to agree to the proposed repayments on a debt management plan. Payments are usually split pro rata to make payments fair. Creditors who do not agree are not bound by the plan.
Legally binding on parties An IVA is a legally binding arrangement with creditors. Creditors cannot take any further action against you if an IVA is approved. A Debt Management Plan is not legally binding which means that creditors may change their minds and recommence adding interest and costs or require increased payments.
Fees In an IVA there are fees involved which are taken from the payments you make into the arrangement. You will typically pay 60 or 72 monthly contributions including fees and you will then be debt free. Debt Management Plan  Providers usually charge a fee which is payable in addition to the payment of any debts. Some charities provide a “free to debtor” debt management plan.

What is a Debt Relief Order?

A Debt Relief Order (DRO) is a form of insolvency for those with debts up to £50,000 and less than £75 disposable income each month. Your debts are frozen for 12 months.  Your debt is written off if your circumstances have not improved within the 12 month period it is active.

It is a designed for people with low value assets non-homeowners. You must have no more than £2,000 worth of these assets in order to qualify for a DRO.

Advantages of a DRO:

  1. The duration of the DRO is usually 12 months.
  2. You do not need to make any monthly payments into the DRO.
  3. Creditors cannot take further action against you without permission from the courts.

Disadvantages of a DRO:

  1. You will not be able to get a Debt Relief Order if you have assets worth over £2,000 and a vehicle worth more than £4,000 (£2,000 if you live in Northern Ireland). You will also not be able to access a DRO if you own a property.
  2. If your circumstances change and you can afford to make repayments or you fail to cooperate, the DRO may be revoked.
  3. Your details will be shown on the Insolvency Register for the duration of the DRO and your credit rating will be affected.

Individual Voluntary Arrangement and Debt Relief Order (DRO) Comparison

Individual Voluntary Arrangement Debt Relief Order
Credit rating An IVA is shown on a credit file for a period of 6 years and will affect your credit rating. Creditors will also issue default notices as you are not maintaining your contractual payments which will also your credit rating. A DRO is shown on a credit file and will affect your credit rating for a period of 6 years.  Creditors will also issue default notices as you are not maintaining your contractual payments which will also your credit rating.
Interest and charges Once an IVA is approved unsecured creditors cannot add any further interest and charges. Once you are enter into a DRO unsecured creditors cannot continue to add interest and charges.
Term The term of an IVA is usually between 5 and 6 years. A DRO term is 12 months unless the Official Receiver believes your conduct requires a Debt Relief  Restrictions Order (DRRO) Debt Relief  Restrictions undertaking (DRRU).
Repayment amount The repayment amount in an IVA is calculated based on affordability following a review of income and expenditure. Monthly payments are required.  Any remaining debt at the end of the arrangement is written off by your creditors. No repayments are required to be made. However, if your circumstances improve during the term of the DRO then the DRO can be cancelled.
Creditor agreement 75% of your unsecured creditors (in value) must vote in favour of the IVA for it to be approved. After the IVA is approved all unsecured creditors are included in the IVA even if they did not vote in favour of the IVA. A DRO does not require creditors agreement.
Legally binding on parties An IVA is a legally binding arrangement with creditors. Creditors cannot take any further action against you if an IVA is approved. A DRO is a legally binding debt solution which prevents creditors from taking any further action against you.
Fees In an IVA there are fees involved which are taken from the payments you make into the arrangement. You will typically pay 60 or 72 monthly contributions including fees and you will then be debt free. There is no fee to apply for a DRO.

Alternative Debt Solutions

Frequently asked questions

An IVA allows you to repay your creditors what you can afford within a specified time frame. If an IVA is approved creditors are legally obliged to write off any outstanding balances upon successful completion of your IVA.

To determine if you qualify for an IVA your income and expenditure is reviewed to see how much you can afford to repay. Your personal circumstances will be considered (income/outgoings), and so will your total debt level. If you meet the criteria then your IVA proposal to creditors will include the total amount to be repaid, the amount to be written off, and the end date for your IVA.

An IVA typically lasts between 5-6 years dependent upon your circumstances.

You do not have to make any payment unless creditors approve your IVA. If you choose to proceed and propose an IVA to your creditors as your chosen debt solution then there are fees involved which are included in your monthly payments, not in addition.

Typically, from the payments that you make into your IVA you can expect to pay the following:

Nominee’s Fee

This fee covers our professional costs and charges for arranging your IVA. This is usually around £1,900.

Supervisor’s Fee

This covers the administration work involved in running your IVA. This is usually based on a percentage of the money you pay back during the IVA and is around 15% of realisations.

Expenses

This includes insurance, a fee for registering your IVA on the Insolvency Register etc

Creditors usually agree the fee basis for your IVA when considering your IVA proposal. Full details of the fees proposed will be discussed with you when drafting your IVA proposal which will require your agreement.

An IVA will affect your credit rating for 6 years from the date of approval as you are not making your contractual payments. The IVA will show on your credit file and will be shown on the Insolvency Register.

If your IVA is approved your Insolvency Practitioner will communicate with your creditors. Your creditors are still required to send you statements in line with the Consumer Credit Act 1974, however once your IVA has been approved your creditors should no longer contact you in relation to payments as these are made from your IVA. It can take up to 3 months for creditors to update their records. Your Insolvency Practitioner will continue to communicate with creditors until this contact ceases.

Not every type of debt can be included in an IVA, exampled of debts that can be included in an IVA are:

  • Council Tax arrears
  • Credit Cards
  • Payday Loans
  • Overdrafts
  • Store Cards
  • Catalogues
  • Arrears on utility bills, e.g. Gas / Water / Electric bills
  • Money owed to family and friends
  • Personal Debts, e.g. money
  • Unpaid personal VAT bills, Tax and National Insurance
  • Unsecured personal loans
  • Tax credit or benefit overpayments
  • Other outstanding bills, for example solicitor’s costs, invoices for building work and vets bills

You cannot include your ‘secured’ debts in an IVA, and you should maintain payments towards these. Examples of debts that an IVA cannot cover are:

  • Child Maintenance
  • Mortgages
  • Student Loans
  • TV License Arrears
  • Hire purchase agreements
  • Magistrates’ court fines
  • Maintenance arrears that have been ordered by a court
  • Social fund loans
  • TV licence arrears