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Home | Individual Voluntary Arrangement (IVA)

Individual Voluntary Arrangement (IVA)

Are you struggling to pay off your debts? Setting up an Individual Voluntary Arrangement might be the best solution for you.

What is an individual voluntary arrangement (IVA)?

If you are unable to afford your debt repayments, an IVA allows you to set up a new payment arrangement with your creditors. It is a formal and legally binding agreement between you and your creditors so you can pay back your debts over a period of time.

This means it’s approved by the court and your creditors have to stick to it. Once an IVA has been approved, your creditors are legally obliged to cease all legal action, freeze all interest and stop adding any late payment charges.

How it works
An IVA must be set up by a qualified person, called an insolvency practitioner.With a predetermined ‘fixed’ repayment period normally consisting of 60 months, an IVA lets you make payments based on affordability rather than their contractual obligations.

On successful completion of the IVA, the creditors are legally obliged to write-off any outstanding debt, leaving you completely debt free.

Who can apply?
Anyone who lives in England, Wales or Northern Ireland (or has done so within the last 6 months) can apply for an Individual Voluntary Arrangement. If you live in Scotland, there is a different arrangement called a Protected Trust Deed.

Whether you are employed, self-employed, a homeowner or a tenant, you can apply for an IVA. You don’t need to have missed any of your contractual debt repayments, but the prospect of doing so should be imminent.

Problem

Technically, there is no minimum debt level required to qualify for an IVA. However, general opinion suggests you should have more than £10,000 in unsecured debts.

An IVA can only be used against unsecured debts. These are debts like:

  • Personal bank loans
  • Pay day loans
  • Personal credit cards
  • Personal overdrafts
  • Store cards
  • Shopping catalogues
  • Credit for electrical goods
  • Furniture credit
  • Shortfalls from a property sale
  • Shortfalls from vehicle finance

 

Basically, an unsecured debt is a debt which isn’t ‘secured’ against an asset. This means creditors do not have the right to repossess any property in the event of a breach of terms of the loan agreement.

There are also other types of debts that can be included in an IVA:

  • Unpaid Inland Revenue bills
  • Unpaid HMRC VAT bills
  • Unpaid HMRC PAYE bills
  • Overpaid benefits
    • (Child Tax Credit, Family Tax Credit, Council Tax Credits, Housing Benefit overpayments)
  • Unpaid Council Tax bills:
    • All unpaid Council Tax bills except those for the current year can be included in an IVA.
  • Unpaid utility bills:
    • All utility bills from previous addresses that have yet to be settled can also be included in an IVA.
  • Mobile telephone bills:
    • Any unpaid mobile telephone or sim card contracts for mobile telephones no longer in use can be included.
  • Personal Guarantees:
    • Any personal guarantee given as guarantee to a 3rd party, such as that given by a Limited Company director.

Solution

As your insolvency practitioner, we will deal with your creditors for you – for the entire process. That means, you will never have to deal with the creditors directly during the lifetime of your IVA.

If you do decide to set up an IVA, we will work out a repayment plan you. This could be monthly payments, a lump sum or a combination of both. The repayment plan will be based on an amount you can reasonably afford and your creditors will need to agree it.

If you’re making monthly payments, the IVA will usually last for 5 or 6 years. Any repayments will be paid directly to your insolvency practitioner (that’s us) and we will distribute the money to your creditors. If the payments you make aren’t enough to pay your debts in full by the end of your IVA, you won’t have to pay the rest, but we will advise you about this.

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What is an IVA - Individual Voluntary Arrangement?

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Frequently asked questions

Will I have to sell my car if I enter an IVA?

You make affordable monthly payments, usually over five or six years.

If you’re a homeowner you’ll usually be able to keep your home, as long as you maintain the mortgage payments and any secured loans on your property.

There are no set up fees to be paid before your IVA is agreed

There are fees once your IVA is in progress, but these will be included in your monthly repayments and will be set by your creditors

If you have a lump sum to offer, this can be paid as a one-off ‘full and final’ settlement, or a combination of a lump sum payment followed by monthly payments

Once you’ve made your final payment any remaining unsecured debt is written off and your creditors can’t pursue you for payments

Will I have to attend court to do my IVA?

No, you don’t need to attend court. For the vast majority of applicants, the IVA application process is conducted at ‘arms length’.

This means that, unless you would prefer otherwise, all your dealings will be with us (your Insolvency Practitioner) via telephone and/or email.

You will not have to attend court and you will not be confronted by your creditors.

How will your creditors react to an IVA?

Since the introduction of the IVA Protocol in February 2008, most high street creditors have become very familiar with IVAs and, in most instances, are supportive of them.

They each have a well documented company policy which outlines their stance on IVA proposals.Occasionally, a creditor may be in the process of taking enforcement action at the time of application and, if necessary, we, as your Insolvency Practitioner can intervene.

In that case, we can apply for an Interim Order. This is a court order which forces the creditor to halt legal action until after the outcome of the creditors’ meeting has been established.

Can I enter an IVA if I'm unemployed?

Yes, technically speaking, you can enter an IVA if your are currently unemployed.

However, it’s likely that other surrounding factors will determine whether an IVA is the most suitable solution for you, such as your employment prospects, the amount you can afford to repay and the level of your debt.

We think it’s best to have a chat with our advisors to fully understand your choices and the obligations that come with an IVA, before you commit yourself.

If I enter an IVA will I have to sell my house?

No, unlike Bankruptcy, an IVA protects property and the equity held within it. As a result, an IVA applicant will not be required to sell their home.

Instead, creditors will demand that you try to release any equity at a pre-arranged time during the IVA term.

Fortunately, creditors’ expectations will be limited by the IVA protocol meaning they can’t force you to sell your home if you can’t release equity from it.

Instead the IVA will be extended for 12 months in lieu of any equity that can’t be released.

Still got questions?

If you’re still feeling confused, feel free to drop us an email or give us a call.

Get in touch
alan smith
alan smith
2021-04-20
Let’s face it. Anyone going through tough times financially doesn’t need an insolvency practitioner shaking their head and wagging their finger in a “naughty naughty boy” manner. And that’s how much of the industry operates but thankfully NOT Middlebrooks. I know that the team at Middlebrooks, led by Claire Middlebrook, genuinely want to help people move on to the next chapter in their lives. They have a heart…and that’s exactly what you want from an IP when times are tough.
Ronnie Murison
Ronnie Murison
2021-04-20
Always a good experience working with the Middlesbrooks’ team.
customer
customer
2021-03-29
Darren Canham
Darren Canham
2021-03-03
Middlebrooks are first class, the support and service is exemplary. Thank you so much.
Maggie
Maggie
2020-09-07
I was supported to file for bankruptcy at a very difficult time in my life. Lauren was professional and informative giving guidance where required. Thank you Lauren x
Vapour fresh Ltd
Vapour fresh Ltd
2020-04-23
Would absolutely, without hesitation, highly recommend this company, . From the initial call to present day, they have been truly amazing to work with. While going through an extremely difficult period in my life, I needed to know that I was going to receive the right level of support to get me through this vital stage of my journey and Middlebrooks provided exactly that. Their vast knowledge and experience (which has been evident throughout the process) enabled me to proceed with confidence to the required conclusion. If you are reading this, you may be seeking the right advice and help too, look no further than this company. They won’t just talk you through the process, they will walk you through the process and they WILL get the job done, efficiently and professionally.
Emma
Emma
2020-03-30
Middlebrooks have been nothing short of fantastic helping me get my IVA approved. From start to finish they made me feel at ease and kept me up to date with everything that was happening. I cant thank or recommend them enough for everything they have done for me and my family.
Cheryl Barnes
Cheryl Barnes
2020-02-12
Middlebrooks have been fantastic and a great help. Couldn’t fault them at all and would highly recommend.
David Price
David Price
2020-02-10
Middlebrooks have been fantastic from start to finish.They kept me well informed & my administrator brooke has been brilliant.Pain & stress free now all thanks to these guys.Thankyou middlebrooks for been there for me at a difficult time would definitely recommend👍👍😊😊
customer Mrs caron malkin
customer Mrs caron malkin
2019-11-20
Thank you to Middlebrooks Business Recovery & Advice Ltd for all your help and advice in going forward and having my IVA approved, everything your team have done was so professionaly handled. Once again thank you.
Trustpilot rating score: 4.8 of 5, based on 48 reviews.

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