An individual voluntary arrangement (IVA) is a legal process for people having difficulty paying their unsecured debts. Under an IVA plan, you make affordable monthly payments towards your debts usually over a 5-year period.
IVA and insolvency
An IVA is a form of insolvency. This means that to qualify for an IVA the value of your debt must be greater than the total value of your assets.
An insolvency practitioner (IP) arranges an IVA on your behalf. The IP assesses your financial situation, draws up the IVA proposal and sends it to your creditors. The IVA plan will propose that all your available surplus income is used to make monthly payments towards your debts during the 5-year term of the IVA. However, you won’t be asked to pay more than you can afford and the money for essential bills and living expenses is always accounted for. Sometimes you can also pay by making a lump sum payment.
At the end of the IVA, any remaining debt is written off.
Creditors’ meeting
Once the IVA plan has been circulated around your creditors, a creditors’ meeting is called and a vote is taken. Creditors representing at least 75% of your total debt need to approve the IVA if it is to go ahead.
If the vote goes in favour of the IVA plan, creditors are unable to take any legal action to recover the debt as long as you keep to the terms of the arrangement. You have to pay a fee but this is included in your monthly payments.
Your IP reviews your finances on an annual basis and a progress report is sent to you and your creditors.
IVA advice
Our online service CCCS Debt Remedy will be able to tell you if an IVA is appropriate for your circumstances. If it is the best solution for you, CCCSVA, our IVA service, can support you every step of the way.