If you have unsecured debt of over £5,000 and you are struggling to meet repayments, then an IVA could be the solution you’re looking for.
An IVA, or individual voluntary arrangement, is a legally binding agreement between you and your creditors, in which you agree to pay an affordable monthly payment for a set period of time – usually 5 or 6 years. After this set period of time any remaining debt will be written off. Your credit file could be affected for 6 years.
You simply make a monthly payment to us and we distribute it to your creditors, removing the worry that you may miss a payment.
- Make one affordable monthly repayment.
- We will give you a timescale of when your debt will be cleared.
- Reduce your monthly outgoings inline with what you can afford.
- Will protect your home from creditors if you are a homeowner.
- Freeze your interest and charges.
- Stop letters and phone calls from your creditors.
- Stop debt collectors and bailiffs from calling you.
- You will be tied into the agreement for the full term.
- Your details will be recorded on the insolvency register.
- You will not be able to get additional credit of more than £500 without your supervisor’s consent.
- Homeowners will need to look into releasing equity from their home.
- Failure to comply with the IVA may lead to bankruptcy.
- Your credit file may be affected for six years.
- Certain debts will still be outstanding.
Step 1 – your first call to us
You can either call us on 0800 988 2318 or request a free call back here. We will go through your finances with you to assess your eligibility for a debt management plan (DMP). We do this for two reasons; the first is that an IVA can take 6 weeks or more to process and if we get you started on a DMP it may make things easier for you in the short term. The second reason is that there is no guarantee that an IVA will be accepted by your creditors, so in case it is not agreed, it is sensible to have a back-up plan.
Step 2 – your IVA proposal
On your initial phone call, as a result of the DMP assessment, we will also assess your basic eligibility for an IVA and, if appropriate, pass you onto our IVA assessment team for a full assessment.
If we feel that an IVA may be appropriate for your circumstances, we will send you out an application form and begin drafting your IVA. We will keep in close contact with you and your creditors during this period in order to make sure that the information is correct.
Step 3 – meeting of creditors (MOC)
When we have drafted your proposal, we will send it out to your creditors so that they can consider it. We will then arrange a “by proxy” meeting where each of your creditors can vote by post as to whether to accept your IVA proposal.
Step 4 – your IVA has been approved
In order for your IVA to progress 75% of your creditors that vote will need to agree it. Hopefully your IVA will be accepted, after which your case will be passed to our supervision department. This is where your IVA will be looked after for you. A dedicated team will then look after you should you have any problems or need to ask questions.
As suggested by the name, on IVA is an individual arrangement, and therefore fees vary from case to case.
There are three kinds of fee involved in an IVA:
A nominee’s fee, a supervisor’s fee and disbursement costs:
- The nominee’s fee is for setting up and agreeing the IVA with you and your creditors and is normally a fixed value fee. This will be taken before any payment is made to creditors.
- It is different for supervisor’s fees. These are for the ongoing management of your IVA and are normally on a percentage basis and spread over the duration of your IVA.
- There are also disbursement costs which cover all the miscellaneous costs of setting up and maintaining an IVA, such as registration fee, insurance, etc.
Example based on a typical client, with approx. £31,000 of unsecured debts who completes a five year IVA and has no equity in any property.
Typical monthly repayments (60 months) £300
Total paid by borrower (including fees) £18,000
Nominee’s fee £1,704
Supervisor’s fee £3,149
Supervisor’s costs £290
Total amount paid to creditors £12,857 (41%)
As a formal insolvency procedure, an IVA is a legally binding agreement with your unsecured creditors and requires an insolvency practitioner (known as an IP).
An IP is a qualified professional with the experience to handle insolvency cases. They will be responsible for ensuring your IVA is fair to both you and your creditors all the way through.
You could be eligible for an IVA if you live in England or Wales, have over £5,000 worth of unsecured debt with at least 2 different creditors.
Fees for IVAs vary depending on the monthly contribution to the arrangement and the agreement that is reached with your creditors. Fees are made up of nominees fees relating to assistance given to prepare your proposal and supervisor fees which relate to the ongoing monitoring of your IVA.
If you are accepted for an IVA, then your creditors will stop interest and charges. They will also stop contacting you about your debts.
You cannot set up an IVA on your own, you need the help of a licensed insolvency practitioner. If an IVA is right for you then our own in-house insolvency practitioners will be available to help you.
We understand that there are some disreputable companies out there, and you want to be careful with your money. MoneyPlus are authorised and regulated by the Financial Conduct Authority (FCA) and you can find our details on the Financial Services Register
We must point out again that an IVA is very much an individual arrangement and that no two are the same. This is just an example aimed to help you understand how they work.
Jeffrey is a civil servant, whilst he lives with his girlfriend, she is unaware of the level of his debts. If made bankrupt he would possibly lose his job.
Before his individual voluntary arrangement (IVA)
Jeffrey owed money to 9 creditors, which totalled £15,499.04. It is difficult to say how long this would have taken to pay off, due to the different end points of each debt.
- Equidebt (overdraft) – £1,035.50 with a payment of £750.00
- Welcome Financial Services (loan) – £7,108.95 with a payment of £181.00
- Moorcroft Debt Recovery (mobile contract) – £520.04 with a payment of £20.00
- Fredrickson International (loan) – £559.37 with a payment of £48.00
- Allied International Credit (utility bill) – £347.39 with a payment of £50.00
- Royal Bank of Scotland (credit card) – £1,396.03 with a payment of £45.00
- Capital One (credit card) – £201.18 with a payment of £10.00
- Moorcroft Debt Recovery (store card) – £412.45 with a payment of £16.00
- Moorcroft Debt Recovery (loan) – £3,868.13 with a payment of £171.00
His monthly payments add up to £1,291, which is more than he earns each month. Three of the debts were with debt collection companies because he was completely unable to pay what he owed.
We assessed his disposable income (DI) to be £120 per month. If he was on a debt management plan it would have taken over 13 years to pay off his debt.
During his individual voluntary arrangement (IVA)
It took 3 months to get his IVA passed, during which his disposable income (DI) increased to £160 per month due to an improvement in his budgeting.
He will pay £160 per month for 5 years from the inception of the IVA. This means that he will pay only £9,600 into his IVA.
He has no equity in any property or significant assets, so at the end of this term his outstanding unsecured debt will be written off. From the money paid into his IVA, he will pay £5,100 in fees to the insolvency practitioner. These fees were agreed by the creditors as part of the IVA. Fees are different in every case.
Entering into an individual voluntary arrangement can often result in the end of financial heartache brought on by unmanageable levels of unsecured debt. However whilst there are many advantages to an IVA there are disadvantages and as such this page aims to deal with those matters. However please remember that every case is different and rests on its own merits.
Once an IVA is approved this doesn’t mean that this is an end of your financial responsibilities as it could fail later on for unexpected reasons. If an IVA fails then your creditors could still demand that you are made bankrupt. It is for this reason that every IVA that we put forward is based on realistic proposals which are agreed by you.
An IVA will affect your credit rating. Unpaid debts will affect your creditworthiness, whether or not an IVA is used to deal with your financial problems. However, if an IVA is successful, that fact will be recorded on your credit file and this may be more favourable to you from the point of view of any future credit provider.
If our advice to you is that you should consider an IVA as the way forward then it will no doubt come as no surprise to you that we will be paid for the work involved. However we will only get paid if your IVA is approved. If your IVA is rejected by your creditors you will not pay us a penny. When we put together your IVA proposal you will see in the documents that we prepare on your behalf how much we will be paid for your case. Each IVA has 2 parts and we will make a charge for both of these. When we are putting the proposal together we will act as your Nominee and we will charge a set fee for this work. How much will depend on the individual case concerned. After your case has been approved we will then take on the role of supervisor. Again there will be a fee for this role which should last for 5 years. Our supervision fees are charged by us a percentage of the monies that we collect from you during the term of the arrangement. As such if we do not collect anything from you then we will not be paid anything.
In an IVA you will make one monthly payment for a period of time, normally 60 months. Your creditors when voting to accept or reject your proposal will also vote on our fees which will come out of the total monies paid into the arrangement. As such it is your creditors who have the final say over how much we will charge for an IVA, and whatever our fees are they will not affect how much you pay into your arrangement.
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