An IVA or Individual Voluntary Arrangement is a legally binding agreement between you and all the people and organisations you owe money to (your creditors). You can try to arrange an IVA when there is no real prospect of paying off all your debts.
The Insolvency Practitioner
You can obtain an IVA with the help of a licensed insolvency practitioner. An IVA insolvency practitioner will help you work out what you can realistically afford to pay back over a period of time – usually 5 years. If three-quarters (measured by the value of the debt you owe to each one) of your creditors agree, all your debts and the future interest on them will be frozen at the time that the IVA proposal is agreed. Make all the payments and, 60 months later, you will be debt free.
We will carefully calculate the amount you can afford to pay and your creditors will usually forego some of the debt you owe and, at the end of the agreed period, these debts are written off (provided you have kept up with the negotiated monthly IVA payments). It happens sometimes, but it would be rare for any creditor to agree to a proposal that wrote off more than 70% of what you owe – more typically, a ClearDebt IVA will cut your debt in half.
As long as you are confident you can maintain the regular monthly payment that is agreed with the help of an IVA insolvency practitioner you could be debt free in 5 years or less.
What Does an IVA Insolvency Practitioner Do?
Licensed insolvency practitioners (IPs) are the only professionals allowed to use insolvency procedures backed by law to help people and companies who have debt problems. Usually, the insolvency practitioner is a qualified accountant or a solicitor. And, all insolvency practitioners are regulated by professional bodies that demand high standards of ethics and performance – and to whom you can complain if dissatisfied.
If you decide to consider a ClearDebt IVA as your route out of debt, our insolvency practitioner’s first task will be to assess whether an IVA is realistic and achievable for you. The insolvency practitioner has a professional responsibility to give the best financial advice: if an IVA is not a good option they will say so and recommend an alternative.
Once you have decided, with the insolvency practitioner’s advice, to propose an IVA, the insolvency practitioner then has a responsibility to both you and the creditors who are owed money.
In every case, the insolvency practitioner must consider what you can really afford to pay each month and take all reasonable steps to ensure that the information you give is true and accurate. The insolvency practitioner will require you to make a full and true statement of your current financial position. If you do not do so the insolvency practitioner may refuse to continue to act on your behalf. If the insolvency practitioner finds that false information has been given once the IVA proposals have been agreed, the IVA may fail.
After your creditors have agreed to an IVA, the insolvency practitioner has a responsibility to make sure that you comply with its terms. If the monthly payments are not made on time, or if you do not comply with the reasonable requests of the insolvency practitioner, then the creditors will be told.
Experience on your side
In saying all of that, our insolvency practitioner’s have many years of experience in dealing with people and families who have debt problems. Almost no situation is new to them and there is almost always a solution that can be found to help you become debt free.
You can read more about the team here at ClearDebt and the roles that they play in helping people manage their debts by viewing the staff profiles.
Try our IVA Calculator to see what your monthly repayments could be in an IVA.
Alternatively, call us and speak to our friendly team on 0800 019 2095 to discuss your situation and see if an IVA is appropriate for your circumstances.