Are you being constantly harassed by your creditors for payment, with threats of CCJs, bailiff action or even bankruptcy? After your basic living costs, do you have an amount of money that you are desperately trying to stretch across all your creditors?
If this sounds familiar, then an Individual Voluntary Arrangement (IVA) could be the ideal solution to remove that creditor pressure once and for all.
An Individual Voluntary Arrangement (IVA) is a legal agreement between you and your creditors. IVAs were introduced under the Insolvency Act 1986. An IVA, provided you stick to it, protects you against any further action from your creditors. Once you’ve committed to an IVA, you could become free of debt after 60 months.
Advantages of an IVA:-
- Prevents any further action being taken by your creditors
- Interest and charges are stopped
- You only make one reduced monthly payment
- Unlike bankruptcy, an IVA is not made known to your employer or landlord
- Unlike bankruptcy, IVAs carry no restrictions on your professional status.
- If you operate a business, the IVA does not have to impact on it.
- An IVA is only available to residents in England, Wales & Northern Ireland.
Dis -Advantages of an IVA:-
- An IVA may have a negative effect on your credit score for up to six years after the IVA is accepted.
- If you are a homeowner you may be required to release equity in the final year of the IVA through remortgaging.
- You may need to make additional payments within an IVA for 12 months to cover any equity value if you are unable to remortgage.
- If you fail to keep up-to-date with payments, during an IVA, the IVA may fail which could lead to bankruptcy.
- IVA details are made public on a register.
- Entering into an IVA would have an adverse effect on an individuals credit rating
There are restrictions on the expenditure of a person who enters into an individual voluntary arrangement or a protected trust deed;
The customer’s lenders or owners may not approve the individual voluntary arrangement
Only unsecured debts included within the individual voluntary arrangement may be discharged at the end of the period and unsecured debts not included remain outstanding
Most individuals offer to make monthly payments from their income for the duration of the IVA however for some it is more appropriate to offer one lump sum payment at the commencement of the IVA (this could take the form of an equity release or a third party offer). If this was the case the duration of the IVA could be much shorter than 60 months.
Once you have contacted Assist My Finances you will be put through to a case advisor who will arrange to review your financial situation in detail. This will be at a time convenient for you and will enable a complete accurate assessment of your circumstances to be made. The best advice can then be given so that you can decide which route you wish to take in resolving your financial problems.
The experienced case advisors at Assist My Finances are fully trained to assess your personal situation and will explain the different options that are available to you to resolve the difficulties that you are experiencing. It is often the case that an IVA is chosen as the preferred solution by individuals once they have fully considered their options.
Once an IVA is in place, you are protected from your creditors attempting to recover their debt from you and your outstanding indebtedness to your creditors will be settled in full via the terms of the IVA. Most creditors will tend to agree to an IVA that offers a better return than bankruptcy that looks capable of being sustained.
The IVA Fees:
The Nominee Fee – This fee covers the IVA set-up cost which includes drafting of the proposal, arranging the meeting of creditors and other administrative work as part of the process. This fee is usually the equivalent of your first five monthly payments once the IVA is approved subject to a minimum of £1,000.
The Supervisor Fee – This is normally 15% of each monthly payment made to your creditors after the Nominee fee has been paid. This will cover the work of your Insolvency Practitioner to distribute payments, manage your IVA creditors and maintain their statutory obligations as per the IVA proposal.
Costs and Disbursements – the monthly payment and what it covers
Each month you will be responsible for paying a set amount to service the debts contained within your IVA. This will be a minimum of £70. Other costs, known as disbursements, are paid for additional things such as registering the IVA, insurance (for the money you contribute on a monthly basis) and other costs such as legal or valuation fees should you need to release the equity in your home. These costs are paid out of your monthly contributions.