IVA FAQs
- What is an Individual Voluntary Arrangement?
- Is an IVA right for me?
- How do I enter an Individual Voluntary Arrangement?
- Who will deal with my IVA?
- How long does an IVA last for?
- How long does an Individual Voluntary Arrangement take to arrange?
- I don’t have any assets – is an IVA right for me?
- What will happen to my business if I enter an IVA?
- What will happen to my home?
- What if some creditors don’t – agree to the IVA?
- Will an Individual Voluntary Arrangement affect my job?
- Will an IVA stop creditors taking further action against me?
- Can creditors take action while I wait for my IVA to be approved?
- Will an IVA cover all of my debts?
- A Bankruptcy Order has been made against me – can I still enter an IVA?
- What if I have received a statutory demand?
- Do I need to contact my creditors to tell them I am applying for an IVA?
- Will an IVA freeze interest on my debts?
- How much will an Individual Voluntary Arrangement cost me?
- Can I decide to cancel my IVA at any time?
- What happens if I don’t meet my IVA payments?
- Is an IVA made public like bankruptcy?
- What happens once my IVA term is complete?
- What if I get a pay rise during my IVA?
- My agreement was not approved. What happens now?
- Are there any other debt solutions that might be suitable for me?
- What is an Interim Order?
1. What is an Individual Voluntary Arrangement ?
It is a legal agreement between a person in debt (debtor) and the people or companies they owe to (creditor), which allows the debtor the opportunity to make monthly payments toward the amount that they owe for a period of time – between five and six years. After that time any remaining debt is considered settled – known as a ‘composition of debts’.
Before an Individual Voluntary Arrangement is approved, a repayment amount is put to the creditors by your appointed Insolvency Practitioner , which they then vote ‘for’ or ‘against’. If the majority vote for arrangement, then it becomes approved, and the creditors must cease further pursuit for monies- by law. They are best suited to people with assets they wish to protect, such as property or a business. People with no assets to protect are often better suited to alternative debt solutions, such as bankruptcy .
If you own significant assets – such as a property or business – then an Individual Voluntary Arrangement can help remove your debt whilst ensuring that your assets remain protected. If you do not own any assets, then it may be a better option for you to go bankrupt.
3. How do I enter an Individual Voluntary Arrangement?
Initially, a 1Stop Money ‘IP’ (Insolvency Practitioner) will examine your case to see if it really is the best choice for you. If this is the case, 1Stop Money then refers you to an IVA provider. Their own IP will then contact you for any information they require to start compiling your proposal. From then on you deal directly with the IVA company, who puts your proposal to your creditors to see if your agreement will be accepted. For more information see The IVA Process.
A licensed Insolvency Practitioner will deal with your case, and is the only person legally permitted to oversee an Individual Voluntary Arrangement. For more information see The roles of the Insolvency Practitioner.
5. How long does an IVA last for?
The general period of time is 5 years, although 5% of cases last for 6 years. Back to Top
6. How long does an IVA take to arrange?
It is a complex legal procedure and takes roughly between 4-8 weeks to set up. Back to Top
7. I don’t have any assets – is an IVA right for me?
If you have no assets to protect, such as a house or business, then bankruptcy or debt management is probably a better debt solution for you. For more information see Bankruptcy.
8. What will happen to my business if I enter an IVA?
Nothing. You will be permitted to trade as normal. Back to Top
9. What will happen to my home?
An Individual Voluntary Arrangement is a debt solution better suited to people with an asset to protect, like a home. With an IVA you will be able to keep your home, but you may be expected to surrender some or all of your equity once the agreement is complete. Many see this as a small price to pay to be able to keep their home.
10. What if some creditors don’t agree to the IVA?
Providing creditors with more than 75% in monetary value vote in favour of the arrangement, then it will be approved. Once approved, all creditors must adhere to it whether they voted for, against or not at all.
11. Will an Individual Voluntary Arrangement affect my job?
No. There are no professional restrictions. Back to Top
12. Will an IVA stop creditors taking further action against me?
Yes. Once you have entered an arrangement with your creditors will not be permitted to make further demands of you – providing you meet the repayments.
13. Can creditors take action while I wait for my IVA to be approved?
Only in extreme cases, but they will be powerless if you have applied for an Interim Order from your local courts. This protects the individual from further proceedings for a short period of time until the deliberation of the IVA and its outcome.
14. Will an IVA cover all of my debts?
No. Most creditors can be included, but there are exceptions. You cannot include your mortgage, student loans, fines, any hire purchases or child maintenance/support arrears. Which debts are covered will be outlined at the start of your agreement.
15. A Bankruptcy Order has been made against me – can I still enter an IVA?
Yes. It is possible to request a bankruptcy annulment, which will have to be approved by your Official Receiver.
16. What if I have received a statutory demand?
It is still possible to enter an arrangement, providing your Official Receiver feels it is a more appropriate debt solution.
17. Do I need to contact my creditors to tell them I am applying for an IVA?
No. The Insolvency Practitioner or associate dealing with your case will contact all creditors on your behalf.
18. Will an IVA freeze interest on my debts?
The Insolvency Practitioners at 1Stop Money collaborate with IVA companies in addressing whether or not it is suitable for an individual. If, with the information provided, they feel that the creditors will not agree to freeze interest, then the Insolvency Practitioner will recommend alternative debt solutions, such as bankruptcy, debt management or debt consolidation.
19. How much will an Individual Voluntary Arrangement cost me?
You will not be expected to pay an outright fee for an IVA – the fee will instead form part of your monthly IVA payment. The preparing, supervising and monitoring of your arrangement for the 5 year term costs somewhere in the region of £2-300 – but his will be outlined and explained by your IVA provider prior to signing any agreements.
20. Can I decide to cancel my IVA at any time?
It is possible to be extracted from your IVA, usually if you have incorrectly entered one – i.e. if you have no assets to protect.
21. What happens if I don’t meet my IVA payments?
Failure to make your payments will result in failure of the IVA itself. Your Supervisor then has the right to seek an Involuntary Bankruptcy Order – which basically means to force bankruptcy proceedings against you.
22. Is an IVA made public like bankruptcy?
No, it is not printed in local press, so friends and relatives need not know, but it is advisable to inform your spouse or partner. It is, however, printed on the insolvency register – which is available online.
23. What happens once my IVA term is complete?
When you reach the end of your agreed term – usually 5 years – any remaining debt will be wiped clean – known as a composition of debts. You will then be considered debt free. If you are a homeowner, you may be expected to surrender any equity in the property at this time.
24. What if I get a pay rise during my IVA?
Your financial situation will be reviewed regularly during your IVA and any pay increases or changes of circumstances will be taking into consideration. Your repayments will be adapted accordingly.
25. My arrangement was not approved. What happens now?
You will now need to consider alternative debt solutions, such as debt management, bankruptcy or debt consolidation. To discuss your options, call 1Stop Money on 0800 012 4039, or request a call back.
26. Are there any other debt solutions that might be suitable for me?
Yes. Depending on your situation, bankruptcy, debt management or debt consolidation may be suitable options to consider.
Once you have decided to enter an IVA, the Insolvency Practitioner at your IVA company will need 4 to 8 weeks to complete the process of compiling information, setting up creditor meetings and organizing the legalities of your arrangement. While this complex legal arrangement is being processed, you will not actually be protected. You will only be covered once the IVA has been fully approved and the process completed – providing it is agreed at the creditors meeting.
If there is a likelihood that creditors will still seek to take action against you during the processing of your agreement, then your Insolvency Practitioner may decide to apply for an Interim Order.
An Interim Order is a court order that can be applied for at your local County Court. When it is in place it immediately protects you from the commencement or continuation of any legal action by the creditors, but for a specific time period only, usually just beyond the date of the creditors’ meeting to discuss your proposal.
An Interim Order can halt an Involuntary Bankruptcy Petition by a creditor, as well as being able to interrupt the seeking of a charges order on a property. Once the Interim Order is in force, the debtor can wait for the IVA to be processed without the worry of threats from their creditors.
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