If you find that an IVA is the best solution for your particular circumstances, you will need an Insolvency Practitioner (IP) to set one up on your behalf.
IVA proposal
Your IP will look at your finances and help you to draw up a proposal to send to your creditors. You need to check the IVA proposal carefully as it is your proposal and you could be prosecuted if it is misleading.
This proposal will recommend that your available surplus income (in other words, money you have left over after paying your essential living expenses) is used to repay your debt. The arrangement will last for an agreed, fixed period: usually 5 or 6 years. After the fixed period has ended, any debt that you haven’t repaid will be written off.
In some cases, you may also propose that you pay a lump sum towards your IVA.
If your IVA proposal is accepted, there will be a fee to pay, but this will be included in the agreed monthly payment you are making towards your debts.
IVA vote
Your IP will send your IVA proposal to each of the unsecured debts held by your creditors. A creditors’ meeting will then take place during which your IVA proposal will be accepted or rejected.
The majority of your creditors will need to vote in favour of the IVA for it to go ahead. This means that among those voting on the day (some may not vote), creditors holding over 75% of the total value of your debt must agree to your IVA.
Creditors may put forward modifications to the proposal but they cannot impose these on you – you can decide whether or not to accept them.
Once your IVA is agreed it becomes legally binding. None of your creditors (even those who did not vote or who voted against the IVA) will be able to pursue you for the unsecured debt or add further interest or charges to it, as long as you keep to the terms of your IVA.
Completion of your IVA
Your IP will review your finances once a year and send an annual report to both you and your creditors. Your IP will also let you know when your IVA has been completed.
When your IVA is completed, any remaining unsecured debt will be written off.
IVA information and advice
As the UK’s leading debt help charity, we can provide information on all aspects of IVAs, and will give you free, confidential debt advice.
Our online counselling service, CCCS Debt Remedy, can assess your situation and identify the best way for you to get out of debt according to your individual circumstances.