IVA Debt IVAs usually comprise only unsecured debt e.g. credit cards, loans, etc. leaving the rights of secured creditors largely unchanged.
An IVA is a court sanctioned arrangement with creditors that can be set up provided the individual can afford a minimum of £100 per month. IVAs are usually suitable for those owing more than £15,000, though some companies will set up IVAs for less. If the debt level is below £15,000, it would be very much in the applicant’s best interests to establish whether they qualify for a Debt Relief Order before proceeding with an IVA.
An IVA forum is an informal exchange of ideas, comments and points of view hosted by various companies and generally available after searching ‘IVA Forum’ on the internet. Those thinking of entering into one of these arrangements would do well to read the comments as many of them are negative.
IVAs are ‘sold’ on the premise that part of the debt is written off when entering the arrangement and that there will be ‘one easily manageable monthly payment’, but this is sadly only part of the story.
Consider these points carefully before committing to an IVA:
- IVAs are intended to protect assets e.g. properties, businesses, etc. A property in negative equity is not an asset and is not lost in bankruptcy, therefore an IVA is not the right choice in this case.
- People living in rented accommodation and holding down everyday jobs have little use for an IVA, as they have nothing to lose.
- IVA companies charge an average of £6500 to set up an arrangement, but this can rise to £12,000 – £14,000 in some cases.
- The above fees are added to the IVA upfront, thus effectively removing the original benefit of having part of the debt eliminated ‘Using Government Legislation’.
- The first 20 payments of any IVA go directly to the company administering the IVA. Not a penny goes to the creditors.
- There is little difference between an IVA and a Bankruptcy in terms of what it does to your credit rating.
- On the Insolvency Register, IVAs and Bankruptcies are listed together and are viewed by the business world as one and the same.
- However, people are released from Bankruptcy after 12 months, whereas an IVA ties you in for 5 – 6 years. If you own a property, the minimum term for an IVA is six years.
- Which begs the question: why remain in an IVA for 5 – 6 years when you can be in and out of bankruptcy in a maximum of 12 months?
The IVA or Insolvency Register is a public record of all court-approved insolvency arrangements, including bankruptcy, Individual Voluntary Arrangements (IVAs) and Debt Relief Orders.
People who enter into the protection of bankruptcy can expect to appear on the bankruptcy register for 15 months, whereupon their name is removed. This information is in the public domain – google ‘Insolvency Register’ – which means that anybody can search for people in these court sanctioned debt arrangements, including bankruptcy.
- You must live in England, Wales or Northern Ireland
- You must have a regular disposable income of at least £100 per month
- You must have unsecured debts of around £10,000 or more (many IVA companies will set this as the minimum)
- You must have 2 or more different creditorsThere are other qualifying criteria to consider such as the type of income you receive, your property situation and you must be insolvent (which means your debt is greater than your assets).