What is an IVA | Benefits of an IVA

An IVA is a legally binding arrangement between a debtor and creditors to ease the burden on an individual of unsecured personal debt. An IVA is arranged and supervised by a Licensed Insolvency Practitioner (IP).

Those undertaking an IVA, a government backed scheme,  can be secure in the knowledge that the IVA, and the Insolvency Practitioner qualified to undertake an IVA, is fully regulated.

An IVA is a formal and highly regulated debt management program which is generally suited to individuals with unsecured debts in excess of £15,000 with disposable monthly income in excess of £150.00.

An IVA is available only to UK citizens and is a viable and recommended alternative to bankruptcy in most cases. Bankruptcy proceedings are financially crippling not only for the period of the bankruptcy but far beyond in terms of credit rating. In most bankruptcy cases where there is a house with equity, that equity has to be realised. This could mean the house must be sold or a spouse or partner has to purchase your interest.

Whilst in some cases bankruptcy may well be the best advice, an IVA was introduced as an alternative by The Insolvency Act 1986.

What are the main points or benefits of an IVA:

• An IVA is highly regulated by the Insolvency Act 1986 and therefore is less likely to be open to abuse by those qualified to provide this service.
  
• An IVA is not advertised in any newspaper unlike a Bankruptcy Order.
• Great consideration is given to protecting the home when setting up an IVA.
• Fees are regulated in accordance with the Insolvency Act 1986, and are paid from the affordable monthly contributions as sanctioned by creditors.
• Fees are set out in the proposal so that you know exactly who is being paid what, when and from where.
• A named Licensed Insolvency Practitioner acts as Supervisor throughout the term of the approved IVA.
• All unsecured creditors prior to the approval of the IVA, are bound by the Arrangement, once the Arrangement is approved.
• When the proposals are approved, interest on credit card and accruing on debts included in the Arrangement, cease from that date.
• Creditors who are bound by the proposal cannot petition for your bankruptcy in relation to the debts in the Arrangement so long as you do not breach the terms of the IVA.
• Creditors who are bound by the proposal also agree to legally waive the balance of their debt when the Arrangement has successfully been concluded.
• Only a Licensed Insolvency Practitioner (IP), belonging to a recognised professional body, can act as your Supervisor in an IVA.
• If your financial circumstances change beyond your control the Licensed Insolvency Practitioner will always be sympathetic and advise you on the appropriate course of action to assist you.

If you are suffering personal financial problems or are experiencing pressure from your creditors, please Ask an Expert who will be able to advise further.