IVA Frequently Asked Questions

What is an IVA?

An IVA (also known as an Individual Voluntary Arrangement) is a legally binding debt repayment agreement between an individual in debt (debtor) and the people he or she owes money to (creditors). It was introduced to the UK as part of the Insolvency Act 1986 and introduced to Northern Ireland in 1989. An IVA can also be known as a better alternative to bankruptcy.

Usually in an IVA, the debtor agrees to pay one affordable set payment each month as a contribution towards repaying their debts, over a fixed period of time - usually 60 months. In some cases, a lump sum payment can be agreed as a full and final settlement of an IVA. The total amount repayable in an IVA varies according to what you can afford to repay, what level of debt you have, who your creditors are and what your circumstances are.

If and when an IVA is accepted, both you and the creditors are bound by the terms of the agreement. All interest and charges on your debts are frozen. On completion of the IVA, any remaining debts are cleared and you can start over debt free.

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How long does an IVA last?

The majority of IVAs last for 60 months or 5 years. In some cases this can be a little longer, depending on your situation. i.e. If you are a homeowner with equity in your home. Some IVAs can be completed in as little as a few months, if you are able to gain access to a lump sum amount which can be used to settle the debts in a full and final arrangement.

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What are the advantages of an IVA?

Some of the benefits of an IVA are listed below.

• 1 easily affordable monthly payment based on your income and expenses.
• Unlike some of our competitors, we do not charge any Upfront Fees, saving you £100s.
• An IVA offers you protection from creditors. Creditor pressure stopped as creditors must deal with us
• Can be complete in as little as 1 year if you can offer a lump sum payment.
• All interest frozen immediately when your IVA begins
• Suitable for tenants or homeowners, individuals or couples, and even business owners
• We can setup an IVA in as little as 4 weeks

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What are the disadvantages of an IVA?

Some of the Disadvantages of an IVA are listed below.

• If you are a homeowner with equity in your property you may be required to introduce part of your share of this equity in the final year of the arrangement. A remortgage may be restricted and on less favourable terms. If you can’t get a remortgage your arrangement can be extended for up to another year.
• If your circumstances change, and your insolvency practitioner can’t get creditors to accept amended terms, the IVA is likely to fail. You will still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your IVA.
• If your IVA fails, your creditors may request that you be made bankrupt. This will always be discussed before your arrangement commences.
• Your credit rating may be impacted for up to six years from the commencement of your IVA.

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Are there different types of IVA?

Yes, there are different types of IVA available depending on your circumstances. IVA Northern Ireland will be able to advise you on what the correct IVA is for your circumstances. Below are the main types of IVA available. Click on a link to read more about each type of IVA.

• Single IVA - An IVA where the debts are just in your name. Read more about a Single IVA
• Interlocking IVA or Joint IVA - An IVA that interlocking with another IVA because some or all of the debts are in Joint names. Read more about Interlocking IVAs
• Lump Sum IVA - An IVA where a lump sum payment is offered to creditors to settle the debt. Can be completed in as little as 12 months. Read more about a lump sum IVA
• Assisted IVAs - The same as a single IVA, except you receive help from someone (i.e a partner or spouse) for repaying the debt.
• Self Employed IVA / Business IVA / Sole Trader IVA - An IVA for business owners and self employed. It can be more complex as it might involve both personal and business debts. Read more about Self Employed IVAs

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Who can do an IVA?

Anyone that resides in Northern Ireland, England or Wales that has debts above £10,000 to two or more creditors and is struggling with payments, may be suitable for doing an IVA.

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How much does an IVA cost to do?

We do not charge any upfront fees for submitting an IVA proposal to your creditors, so in the event that your IVA proposal is unsuccessful, then you will not be charged a penny. If your IVA is successful and becomes legally binding, your creditors determine what we should be paid as a fee for managing your case. Our fee will be deducted from your monthly payment or your agreed lump sum payment to your creditors, so you will never receive any bill from us or be asked for any additional fees.

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What happens when an IVA is finished?

At the end of the IVA process the supervisor will issue you with a "Statement of Completion", normally within three months of the final payment. A copy of this will also be sent to the Insolvency Service for their records. You are then officially Debt Free.

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What happens if I cannot make my IVA payments?

If you don't keep to the terms of your IVA and default on your IVA payments then the supervisor of the IVA can start bankruptcy proceedings against you.

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What are the advantages of an IVA compared to Bankruptcy?

Even though an IVA is a formal Insolvency solution, it does not carry some of the serious implications that Bankruptcy does and could be more beneficial in some cases. If you own a home or other assets, then an IVA may be preferred. You are not at risk of losing your job in some professions if you choose an IVA over Bankruptcy. There are no professional disqualifications and you maintain your right to hold public office.

In an IVA you have some disposable income left over each month to make some sort of repayment to creditors, and so it shows you have a willingness to deal with your debts and repay as much as you can afford. An IVA is designed to fit in with your personal circumstances and you may be able to keep certain assets such as a car or vehicle. You should be able to maintain reasonable car payments outside of your IVA payment. Furthermore, bankruptcy proceedings are much more costly for the debtor and creditor than setting up an IVA.

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Will my IVA be publicised?

An IVA is publicised on the Insolvency Register. This is an online database of everyone that has gone bankrupt or done an IVA.

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Can I set up an IVA if a Bankruptcy Order has been made against me?

Yes, If the Bankruptcy hearing has not taken place yet and you have not yet been discharged, this is possible. It is also possible to annul a Bankruptcy and do an IVA if it is deemed to be a more appropriate solution. When your IVA is in place, you will be legally protected from your creditors and and any court action pending will be dropped.

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Will I have to sell my house if I do an IVA?

Unlike bankruptcy, with an IVA you will not be forced to sell your home. If you have equity in your home at the end of the IVA agreement, you may be asked to introduce some of this equity towards the IVA for your creditors. If you are unable to release any equity or cannot get a remortgage, your IVA may payments may be extended for a longer period of time.

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Will my creditors agree to my IVA proposal?

In order for your IVA to be accepted, 75% of your creditors, by debt value, have to vote in favour of it. We have a very high success rate of IVAs accepted and we do not put forward a proposal for an IVA unless we are pretty sure it will be accepted. We cannot guarantee that it will be accepted, but we do not charge any upfront fees, so if your case is not accepted, you will not lose out financially. It is in your, ours and the creditors interest that we put forward a good IVA proposal with a view to it being accepted.

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What happens if my IVA is rejected?

When an IVA application is made, a 'Meeting of Creditors' takes place. At this meeting 75% of your creditors, by debt value, must vote in favour of the application in order for it to be approved. On some occasions IVA applications can be rejected by creditors. The most common reason for creditors to turn down an IVA application is that they feel the proposed repayment is not at a level that meets individual creditor guidelines, or they may feel that the IVA will not be adhered to.

Don't panic if your IVA has been rejected. We will try our best to work or make amendments to get it accepted. We are part of McCambridge Duffy who have a very high success rate in getting IVAs accepted and have successfully had thousands of IVA applications accepted over the years. Also, at IVA NI we do not charge any upfront fees, so unless your IVA has been approved and is going to go ahead, you will not be charged anything whatsoever with regards to the work done on your application. It is in ours, yours and your creditors interest that your IVA proposal is sound and reasonable so that all parties are happy for it to go ahead.

If you have an IVA proposal with another company and it has been rejected, we will be happy to review it for you to see if there is anything we can do. In the event that your IVA is not accepted and we cannot negotiate a new proposal or if an IVA is not your best option, we will, with your permission, point you in the right direction for taking the next step towards dealing with your debts.

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Can I continue to trade my business if I am in an IVA?

Yes. An IVA is suitable for business owners.

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Will an IVA affect my credit rating?

Your credit rating will be affected if you do an IVA. Although, it's possible that if you are struggling or behind on payments, then your credit rating has already been affected. Whilst the IVA is in place you are not allowed to take out any further unsecured credit such as credit cards, store cards, personal loans, etc. This is a standard stipulation of an IVA and a note will be put on your credit file alerting potential lenders to the fact that you have entered the agreement. This note will remain on your credit file for a total period of six years (i.e. normally one year longer than the duration of the IVA).

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