Check If You Qualify For An IVA
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May not be suitable for all circumstances.
Fees may apply.
Monthly payments calculated on affordability.
Entering into an IVA will affect your credit rating.
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Our 3 Step Process
Click “Get Started” above and answer the questions
Speak to a debt expert to find out if you qualify for an IVA.
We help you with your IVA proposal.
Our 3 Step Process
Click “Get Started” above and answer the questions
Speak to a debt expert to find out if you qualify for an IVA.
We help you with your IVA proposal.
What is an IVA?
An IVA stands for an Individual Voluntary Arrangement, this is a legally binding agreement between you and your creditors, where you agree to repay what you can afford within a fixed period, usually 5 to 6 years.
An IVA allows you to make one monthly payment, so keeping on top of things is much simpler. Your personal circumstances will be considered (income/outgoings), and so will your total debt level. Creditors’ approval is required before an IVA can commence. Any remaining balance at the end of the arrangement will be written off by your creditors.
A licensed Insolvency Practitioner must act on your behalf and negotiate with your creditors so you don’t have to. During the IVA, your creditors must freeze all interest and charges. If your IVA is approved by your creditors this will require a long and professional relationship which requires you to be transparent and honest, you are required to keep the Insolvency Practitioner updated with any changes.
What are the risks and benefits of an IVA?
Risks
- An IVA will affect your credit rating.
- Your IVA will be shown on the Insolvency Register.
- You cannot take out further credit whilst you are in the IVA above £500.
- Only unsecured debts can be included in an IVA.
- Failure to maintain payments may lead to the IVA being terminated.
Benefits
- Creditors cannot apply interest and charges following approval.
- Prevents the creditors included in the arrangement from taking any further action against you.
- The term of your arrangement is a set period.
- Affordable monthly repayments.
- Any outstanding debt at the end of your IVA is written off.
Comparisons
What is a Debt Management Plan (DMP)
A Debt Management Plan is an informal agreement between you and your creditors to repay your debts. Debt Management Plans can help when you can no longer afford the agreed contractual repayments but you can afford a smaller amount each month.
A Debt Management Plan allows you to pay back the debt with one agreed monthly payment which is distributed between your creditors. There are third party companies that do charge fees for administering a Debt Management Plan.
Advantages of a Debt Management Plan:
- It is an informal / flexible plan where you can increase or decrease payments to your creditors dependent upon your circumstances.
- Creditors may reduce your repayments and stop interest and charges, but are not obliged to do so.
- You make one affordable monthly payment to a Debt Management Company.
Disadvantages of a Debt Management Plan:
- Creditors can withdraw from the plan at any time, and the plan offers no legal protection.
- There is no guarantee that interest and charges will be frozen however it does happen in the majority of cases.
- Your credit rating is affected, as you are not making the contractual monthly repayments.
Individual Voluntary Arrangement and Debt Management Plan Comparison
| Individual Voluntary Arrangement | Debt Management Plan | |
| Credit rating | An IVA is shown on a credit file for a period of 6 years and will affect your credit rating. Creditors will also issue default notices as you are not maintaining your contractual payments which will also your credit rating. | Once you enter a Debt Management Plan creditors will issue default notices as you are not maintaining your contractual payments and this will affect your credit rating. |
| Interest and charges | Once an IVA is approved unsecured creditors cannot add any further interest and charges. | If you enter into a Debt Management Plan your creditors will usually agree to freeze interest and charges once payment arrangements have been agreed. It is not guaranteed that all creditors will agree to proposed payment arrangements or to freeze interest and charges. |
| Term | The term of an IVA is usually between 5 and 6 years. | The term of a Debt Management Plan varies as it is depends on how long it will take you to repay all your debts in full and this will vary depending upon the monthly payments. |
| Repayment amount | The repayment amount in an IVA is calculated based on affordability following a review of income and expenditure. Monthly payments are required. Any remaining debt at the end of the arrangement is written off by your creditors. | The repayment amount in a Debt Management Plan is calculated based on affordability following a review of income and expenditure. You are required to pay your debts in full. |
| Creditor agreement | 75% of your unsecured creditors (in value) must vote in favour of the IVA for it to be approved. After the IVA is approved all unsecured creditors are included in the IVA even if they did not vote in favour of the IVA. | Creditors need to agree to the proposed repayments on a debt management plan. Payments are usually split pro rata to make payments fair. Creditors who do not agree are not bound by the plan. |
| Legally binding on parties | An IVA is a legally binding arrangement with creditors. Creditors cannot take any further action against you if an IVA is approved. | A Debt Management Plan is not legally binding which means that creditors may change their minds and recommence adding interest and costs or require increased payments. |
| Fees | In an IVA there are fees involved which are taken from the payments you make into the arrangement. You will typically pay 60 or 72 monthly contributions including fees and you will then be debt free. | Debt Management Plan Providers usually charge a fee which is payable in addition to the payment of any debts. Some charities provide a “free to debtor” debt management plan. |
What is a Debt Relief Order?
A Debt Relief Order (DRO) is a form of insolvency for those with debts up to £30,000 and less than £75 disposable income each month. Your debts are frozen for 12 months. Your debt is written off if your circumstances have not improved within the 12 month period it is active.
It is a designed for people with low value assets non-homeowners. You must have no more than £2,000 worth of these assets in order to qualify for a DRO.
Advantages of a DRO:
- The duration of the DRO is usually 12 months.
- You do not need to make any monthly payments into the DRO.
- Creditors cannot take further action against you without permission from the courts.
Disadvantages of a DRO:
- You will not be able to get a Debt Relief Order if you have assets worth £2,000 or more such as a vehicle or own a property.
- If your circumstances change and you can afford to make repayments or you fail to cooperate, the DRO may be revoked.
- Your details will be shown on the Insolvency Register for the duration of the DRO and your credit rating will be affected.
Individual Voluntary Arrangement and Debt Relief Order (DRO) Comparison
| Individual Voluntary Arrangement | Debt Relief Order | |
| Credit rating | An IVA is shown on a credit file for a period of 6 years and will affect your credit rating. Creditors will also issue default notices as you are not maintaining your contractual payments which will also your credit rating. | A DRO is shown on a credit file and will affect your credit rating for a period of 6 years. Creditors will also issue default notices as you are not maintaining your contractual payments which will also your credit rating. |
| Interest and charges | Once an IVA is approved unsecured creditors cannot add any further interest and charges. | Once you are enter into a DRO unsecured creditors cannot continue to add interest and charges. |
| Term | The term of an IVA is usually between 5 and 6 years. | A DRO term is 12 months unless the Official Receiver believes your conduct requires a Debt Relief Restrictions Order (DRRO) Debt Relief Restrictions undertaking (DRRU). |
| Repayment amount | The repayment amount in an IVA is calculated based on affordability following a review of income and expenditure. Monthly payments are required. Any remaining debt at the end of the arrangement is written off by your creditors. | No repayments are required to be made. However, if your circumstances improve during the term of the DRO then the DRO can be cancelled. |
| Creditor agreement | 75% of your unsecured creditors (in value) must vote in favour of the IVA for it to be approved. After the IVA is approved all unsecured creditors are included in the IVA even if they did not vote in favour of the IVA. | A DRO does not require creditors agreement. |
| Legally binding on parties | An IVA is a legally binding arrangement with creditors. Creditors cannot take any further action against you if an IVA is approved. | A DRO is a legally binding debt solution which prevents creditors from taking any further action against you. |
| Fees | In an IVA there are fees involved which are taken from the payments you make into the arrangement. You will typically pay 60 or 72 monthly contributions including fees and you will then be debt free. | There is no fee to apply for a DRO. |
Alternative Debt Solutions
Available to residents of the UK
ADVANTAGES:
- informal / flexible plan where you can increase or decrease payments to your creditors dependent upon your circumstances.
- Creditors may reduce your repayments and stop interest and charges, but are not obliged to do so.
- You make one affordable monthly payment to the DMP Company.
DISADVANTAGES:
- Creditors can withdraw at any time, and the plan offers no legal protection.
- There is no guarantee that interest and charges will be frozen however it does happen in the majority of cases.
- Credit rating is affected, as you are not making the contractual monthly repayments.
Paying less over a longer period of time may increase the total amount repayable.
Fees may apply.
England, Wales and NI customers
ADVANTAGES:
- One affordable monthly repayment.
- Creditors can not continue to add interest and charges once it is approved.
- Debt Forgiveness as you only pay back what you can afford within a set period.
DISADVANTAGES:
- Your credit rating will be affected for a period of 6 years from approval.
- You cannot obtain further credit above £500.
- Failure to maintain payments may lead to the IVA being terminated.
Subject to creditor approval.
Fees apply.
Scottish residents only
ADVANTAGES:
- One affordable monthly repayment.
- Creditors cannot continue to add interest and charges once it is approved.
- Once approved you are protected from legal action from creditors included in the PTD.
DISADVANTAGES:
- Your credit rating will be affected for a period of 6 years from approval.
- Failure to maintain payments puts your Trust Deed at risk of being terminated.
- Your Trust Deed will be listed on the Register of Insolvencies.
Subject to creditor approval.
Fees apply.
England, Wales and NI customers
There is no fee payable to enter into a DRO
ADVANTAGES:
- The duration of the DRO is usually 12 months.
- You do not need to make any payments into the DRO.
- Creditors cannot take further action against you without permission from the courts.
DISADVANTAGES:
- You will not be able to get a Debt Relief Order if you have assets worth £2,000 or more such as a vehicle or own a property.
- If your circumstances change and you can afford to make repayments or you fail to cooperate, the DRO may be revoked.
- Your details will be shown on the Insolvency Register for the duration of the DRO and your credit rating will be affected.
To declare yourself bankrupt you have to pay a fee of £680, which can be paid in instalments. By applying for bankruptcy please be aware that you could lose any assets or items of value if the official receiver decides to sell them.
ADVANTAGES:
- In most cases you are discharged from bankruptcy after 12 months.
- Creditors can no longer pursue you in relation to the balances outstanding.
- Your debts are written off.
DISADVANTAGES:
- Your credit rating will be affected.
- If you have a disposable income then you may be required to make payments for up to 36 months.
- Your details will be shown on the Insolvency Register.
- Self-Help (UK residents)
- Debt Arrangement Scheme (Scottish residents only)
- Minimal Asset Process (Scottish residents only)
- Equity Release (UK residents)
- Sequestration (Scottish residents only)
- Dealing With Creditors Direct
- Debt Consolidation Loan
Fees may apply.
Frequently asked questions
An IVA allows you to repay your creditors what you can afford within a specified time frame. Creditors are legally obliged to write off any outstanding balances upon completion of your IVA. Creditor approval is required in order for your IVA to commence.
To determine if you qualify for an IVA your income and expenditure is reviewed to see how much you can afford to repay. Your personal circumstances will be considered (income/outgoings), and so will your total debt level. If you meet the criteria then your IVA proposal to creditors will include the total amount to be repaid, the amount to be written off, and the end date for your IVA. A typical IVA lasts around 5 or 6 years, after which the debts included in the IVA will be written off.
An IVA typically lasts between 5-6 years dependent upon your circumstances.
Our initial advice in relation to an IVA is free. If you choose to proceed and propose an IVA to your creditors as your chosen debt solution then there are fees involved which are included in your monthly payments.
An IVA will affect your credit rating for 6 years from the date of approval as you are not making your contractual payments. The IVA will show on your credit file and will be shown on the Insolvency Register.
If your IVA is approved your Insolvency Practitioner will communicate with your creditors. Your creditors are still required to send you statements in line with the Consumer Credit Act 1974, however once your IVA has been approved your creditors should no longer contact you in relation to payments as these are made from your IVA. It can take up to 3 months for creditors to update their records. Your Insolvency Practitioner will continue to communicate with creditors until this contact ceases.
Not every type of debt can be included in an IVA, debts that can be included in an IVA are:
- Council Tax arrears
- Credit Cards
- Payday Loans
- Overdrafts
- Store Cards
- Catalogues
- Arrears on utility bills, e.g. Gas / Water / Electric bills
- Money owed to family and friends
- Benefit Overpayments
- HMRC debt
- Tax Credit
- National Insurance
- Personal Debts, e.g. money
- Unpaid VAT bills
You cannot include your ‘secured’ debts in an IVA, and you should maintain payments towards these. Examples of debts that an IVA cannot cover are:
- Court Fines
- Child Maintenance
- Mortgages
- Student Loans
- TV License Arrears