Individual Voluntary Arrangement IVA-Is it right for me
The simply answer is actually not really. Since the Individual voluntary arrangement IVA was modified around 2000 for the consumer debt market there has been an abuse of the way these financial instruments have been sold. We escalated complaints to The Insolvency Service and a investigation was triggered where The Insolvency Service asked people who had entered IVA’s whether or not they had had bankruptcy explained as an option when they were considering a debt solution. 29% of the people who actually responded, stated that they were not offered or advised of any other debt solutions. Subsequently certain IVA providers were investigated and fined in sole instances forced to close down.
The Individual voluntary arrangement IVA can be a very effective insolvency tool that can settle unmanageable debts. Your total monthly income is calculated and your essential fixed and variable living costs should be taken into account and deducted from the income. The residual is then calculated over usually a 60 month period and an offer for repayment to creditors is made. This usually equals a percentage in the pound. Anything from £0.01% all the way up to £1.00% depending on whats affordable.
It generally takes 4-6 weeks for an IVA to be processed and agreed or rejected. there are costs attached to IVA’s that generally mean that the Insolvency firm take their fees in advance of your creditors.
The advise here would be to:
- Make sure you are comfortable with your advisor.
- Properly read the contract that you are about to agree to and be hard on yourself to really see if the repayments will be manageable for you. Remember that even if you got to 59 months into repaying the IVA and for whatever reason you simply couldn’t make the last payment that you could be at risk of failing the IVA and being sent straight back to the position you were in at the time you entered the agreement.
- Ask who the insolvency practitioner is that will be drafting and managing the IVA.
- Check them out on line to make sure theres no negative posts on Forums.
- You need to be able to trust who is going to be managing your financial affairs.
Individual voluntary arrangement the IVA usually comprise only unsecured debt e.g. credit cards, loans, personal guarantees and etc. leaving the rights of secured creditors largely unchanged.
This is a court sanctioned arrangement with creditors that can be set up provided the individual can afford a minimum of £100 per month. They 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.
IVA’s are notorious for failing. There are totally mixed views on IVA’s . There are more people who are disillusioned with them than happy with them. The reason for this is: that it was in the very late 90’s that IVA’s were adapted for the consumer debt market. Up until then they were used by sole traders and business owners to assist with cash flow. So there has certainly been an abuse away from the original concept of the IVA. Government Licensed debt management companies and Insolvency practitioners then snapped up other debt management companies in order that the client base at some point could migrate into an IVA so the client went from a debt management plan over to an Individual voluntary arrangement then who knows. We know that the failure rate is high but we also know that creditors get paid at the end once the IVA company has been paid. The big question is always are in IVA companies interested in looking after a client after they have been paid?
Feel free to call us for a confidential chat about your circumstances on Tel: 01425 600129 and we will talk you through your options and how we can help you. We offer an a – z service, including the completion of all the forms and the all-important income and expenditure.