IVA - a real alternative to bankruptcy
- Get legal protection from your creditors
- Freeze interest and charges on your debts
- Government legislation that helps you clear your debts
- Prevent or stop legal action - including bankruptcy
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A practical solution to unmanageable debt
An IVA (Individual Voluntary Arrangement) could be the solution to the debt problems you thought you'd never escape without declaring yourself bankrupt.
If you can't keep up with your monthly debt payments, an IVA could:
- Reduce your monthly payments. Down to a level you can afford.
- Reduce the total amount you have to pay. Writing off a portion of your debt.
- Reduce the time you'll spend repaying your debts. Giving you a date in the future when you know your debts will be gone.
An IVA is a legally binding agreement between you and your lenders. By accepting the IVA, they're agreeing to accept lower payments, not to pursue any legal action against you (including trying to make you bankrupt), and to write off any outstanding debt at the end of the IVA. You agree to pay as much as you can afford for the time agreed
A light at the end of the tunnel
Perhaps the most important thing an IVA delivers is peace of mind, providing concrete answers to the questions you're probably asking yourself every day:
- Will I be able to afford my monthly payments?
Yes - your monthly payments will be based on what you can afford after paying for your essential expenses.
- Will I lose my home?
Unlike bankruptcy, in an IVA you are highly unlikely to be forced to sell your home.
- Will my lenders take me to court or try to make me bankrupt?
No. As long as you stick to the terms of the IVA, they won't be able to.
- Will I ever be debt free?
Yes - and in an IVA, you'll know exactly when you will be.
Subject to eligibility and acceptance. Debt write off applies only on completion of an IVA, alternative solutions may be offered. Initial advice is free, fees payable for continuing services. Your ability to obtain credit will be affected for 6 years. Homeowners may be required to release the equity in their property. Calls may be recorded.
IVA frequently asked questions
- What is an IVA?
Using Government legislation that is designed to help you clear debt, an IVA is a formal agreement between you and your creditors and stops ALL creditor demands. It enables you to pay off your debts in affordable monthly payments over a fixed period (usually 60 months).
- How can an IVA help me?
Once set up and if you continue to pay the agreed amount each month you’ll be protected from any further action being taken against you by your creditors.
If you stick to the agreement for the full term, your creditors write off any unpaid debts.
- How does the process work?
Talk to us, explain your situation, and we'll assess whether or not an IVA could be the right solution for you. If it is, we'll work with you to draw up an IVA Proposal - a formal offer showing your lenders what you would be able to pay.
Assuming this Proposal is approved, you'll simply start making your monthly payments (which will be based on your available income after you've paid all your regular expenses). As long as you fulfil your side of the agreement, any outstanding debt will be written off at the end of the IVA.
- What will happen if I cannot meet my payments?
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Debt Reducers will agree the payment plan that best suits your needs. This should ensure you can meet your payments for the duration of the IVA, as not meeting your agreed payments can result in the IVA failing, and might even lead to bankruptcy. If your circumstances do change and you find that you are unable to meet your payments, we will try to renegotiate the terms of the agreement with your creditors.
- What happens when the IVA is completed?
As long as you have fulfilled the terms of the agreement, your creditors will have no further claim against you and the balance of any remaining unpaid debts is written off.
- Do all of my creditors have to agree to an IVA?
To approve your IVA, at least 75 per cent (by debt value) of the creditors who vote at a meeting, must accept your proposals. Even if they don’t vote, or they vote against your proposals, each of your creditors will be bound by the agreement as long as it has been accepted by this majority.
- Why would my creditors accept an IVA?
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In accepting an IVA, your creditors will expect to get a better return than they would from any other reasonable alternative, and your payment proposals should demonstrate this to be the case. Your creditors will also benefit from the fact that your performance with the terms of your IVA will be monitored.
- What will an IVA cost?
All the costs associated with your IVA are included in the payments you make into it. You don’t pay anything extra. At Debt Reducers, we are committed to being totally clear, open and fair to both you and your creditors about our fees and any other costs that may be incurred.
We will fully inform you of the proposed fees for your particular case before you enter into the IVA.
- Will an IVA protect my house?
One of the key benefits of taking out an IVA over bankruptcy is that the individual’s home is safe from repossession. However, if you own your own home it is likely that you will have to release some of the equity in your property towards the total dividend.
- What is the difference between an IVA and bankruptcy?
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IVA
- Duration: 5 years, in most cases
- Effect on home: Very unlikely to force sale of home; will probably require release of some equity
- Effect on career: Some companies may not employ an individual with an IVA
- Publicity: Not advertised, but will appear in the Individual Insolvency Register (which is publicly available)
Bankruptcy
- Duration: Normally 1 year (payments can last for 3 years; in exceptional cases, a Bankruptcy Restriction Order may be granted, which can last 15 years)
- Effect on home: Very likely to force sale of home
- Effect on career: Bankrupt individuals cannot hold certain positions: e.g. company director, local government councillor or justice of the peace
- Publicity: Bankruptcy will be advertised in newspapers.
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IVA Case studyMr and Mrs ‘B’ had debts totalling £34,000 costing them £781 each month. With an IVA through Debt Reducers they now pay just £300 per month for 60 months.
Mrs S, Kent says this about IVAs:"I just wanted to say a HUGE thank you to you. I didn't realise this could happen so smoothly - it makes me cringe when I think about how I could have gone on struggling for the rest of my life! You have no idea how much of a relief this is! so thank you so much again!"