After receiving debt help you may decide an IVA is the best option to resolve debt problems. The IVA will typically last for 5-6 years and at the end of the solution, any debt which has not been repaid is written off. The best IVA companies can make the process simple and straight forward.
If you need help with an IVA or wish to receive debt help you can call our not-for-profit charity advice team on 0800 085 0226 or complete our debt test.
IVA Debt Companies
An IVA is a legally binding contractual agreement whereby the person in debt pays one monthly payment which they can afford. The IVA will require any realisable equity to be released near the end of an IVA. Usually this means the equity from a house, car, stocks or shares. If the equity can’t be released in a house through a remortgage or third party payment, then the IVA will typically last for 6 years and you will keep your property.
To propose an IVA, an insolvency practitioner is required. The insolvency practitioner (IP) will work for an IVA company and will propose the plan on your behalf. The IP will be responsible for managing the IVA and will become the IVA supervisor once the IVA has been accepted. There are many IVA companies able to propose an IVA on your behalf throughout England, Wales and Northern Ireland. Your IVA company doesn’t have to be local, however sometimes it can be beneficial if your insolvency practitioner is nearby.
Applying for an IVA via an IVA Company
If you enter an IVA the interest and charges are frozen. The proposal usually takes 10 -14 weeks to gather paperwork and create the plan. The creditors are given the option to accept, reject or negotiate the proposal. Often creditors will accept the proposal as long as they feel it’s the best offer they can get.
If the creditors decide to modify the arrangement it doesn’t mean the proposal won’t go ahead, however there is sometimes extra information required during the creditors meeting. You don’t have to attend the creditors meeting as you IVA company will do this for you.
The IVA company will let you know what happens after the IVA creditor meeting. If the IVA proceeds then you stop paying your unsecured debt (credit cards, overdrafts, payday loans etc) and pay one monthly payment to the IVA company. This payment continues until the plan is finished. At the end of the solution any remaining debt is written off by your Insolvency practitioner.
Lump Sum IVA
The other type of IVA is known as a lump sum IVA or full and final IVA. Sometimes a person will want to enter an IVA and offer what they can. However, if they are unemployed then they may not be able to make a monthly contribution. But, if there is a lump sum, for example a redundancy payment, divorce settlement or inheritance, this could be used as a one-time payment towards the creditors.
For instance, a £10,000 inheritance could be proposed towards the creditors to cover a £30,000 unsecured debt. The IVA company would take their fees from the monthly payment, or in this case the lump sum payment, then divide the remaining sum of money among the creditors on a pro-rata basis. Usually a lump sum IVA will last for a shorter period than a traditional contribution based IVA.
Get IVA Advice
For debt advice and support on an IVA or help with IVA companies speak to our charity advisors. We can help ensure the IVA is the best advice for you and point you in the right direction to get the IVA established. We’ll take every care to guarantee you’re given every piece of important IVA help.
You can call our advice line on 0800 085 0226. This is a free number from a landline. If you’re calling from a mobile please let us know and we’ll call you back.
Our debt analyser can help you understand whether the IVA is the best option for you too. It takes 5 minutes to complete and can point you towards suitable debt solutions you may qualify for. You should always speak to a professional debt adviser before entering any debt solution.