An individual voluntary arrangement is a legally binding agreement between you and your creditors stating that you will repay your debts at an agreed level.

Basically, you and your creditors come to a legal arrangement whereby you pay off as much of your debt as you can in (usually) five years, and after this time the remaining debts are written off.

Your adviser will ask questions regarding your current financial situation, if it is deemed that an IVA is the correct debt solution for you, we will discuss a realistic repayment plan.

A meeting is called with your creditors where they will be called upon to vote either ‘for’ or ‘against’ the arrangement. In order for the IVA to be approved, 75% (in value) of the creditors who vote at your meeting of creditors must agree to the IVA – if they do agree, the other 25% must go along with the arrangement.

If you keep up your payments, in 5 years’ time all of the debts in the arrangement will be written off, no matter how much debt is remaining.

During the time of your IVA, creditors must legally stop all interested and charges as well as stop chasing you for payment.

What is an IVA?

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.

What fees will I be charged and why?

As suggested by the name, an 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.
IVA example

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.