Individual Voluntary Arrangements (IVAs) Frequently Asked Questions

Who can benefit from an IVA?

Residents of England, Northern Ireland, and Wales who have debts in excess of around £8,000 and consistent source of income may benefit from an IVA debt management solution. It might also be available to those that can raise a lump sum. A Trust Deed is an equivalent solution for residents of Scotland.

Will an IVA allow me to write off my debt?

An IVA proposal may include the write-off of some debt. However, if a debt management company says it can write off 90 percent of your debts with an IVA, it might pay to be sceptical.  In reality, the level of debt write-off will depend upon your personal circumstances and might be substantially less.

Why select an IVA instead of bankruptcy?

Bankruptcy carries some restrictions that an IVA does not have. Some people also consider that it carries greater “stigma” than an IVA. Property owners, depending upon their circumstances, might find it advantageous to select an IVA rather than bankruptcy.

It’s possible that an employee might find that an IVA is acceptable to their employee where bankruptcy is not. Some professionals might find the same with respect to their regulators or professional membership bodies. In addition, an IVA might be a less expensive debt management solution for both a debtor and his or her creditors.

How long does an IVA last?

The standard length of an IVA is five years, though some property owners might find that this needs to be extended by one further year. However, this time period may in certain circumstances be shortened, especially when the debtor is later able to make available a lump sum payment toward the debt via a third party.

How much does an IVA cost?

IVA repayment amounts vary by debtor based on assets held and the income remaining after accounting for living expenses. Creditors have become increasingly flexible about accepting IVA proposals even where the percentage return on the debts owed is relatively low. Your expenditure will be restricted throughout an IVA as your payment is based upon affordability and therefore may change if your circumstances change.

What happens to my home if I use an IVA?

IVA providers and lenders are subject to an industry agreement referred to as The IVA Protocol. The IVA providers associated with Jubilee Finance generally operate within this protocol framework. The sale of an owned home is not generally a requirement of an IVA.

When our debt management professionals review your income and expenditure to calculate the amount that must be paid to unsecured creditors, they ensure that you will be able to make payments to a secured creditor such as a mortgage company.

However, you may be asked to release equity held in the property, something that might be achieved by increasing the mortgage at the end of your IVA period. If you cannot secure such additional borrowing, the monthly payments you make for the IVA might have to be extended for a year.

How do I set up an IVA?

Read the information on this site and contact us with any questions. We will review your financial situation and tell you whether you can benefit from an IVA. If you elect to move forward with an IVA, we will help you find an Insolvency Practitioner (IP). This person is responsible for IVA document preparation, contacting affected creditors, and administering the IVA proposal and its establishment.

If I have received a bankruptcy order from a creditor, am I still able to establish an IVA?

If you have been issued a bankruptcy order but have not yet been subject to a bankruptcy hearing, an IVA may still be established.  Your IP might have to halt the bankruptcy process by issuing an Interim Order so the IVA proposal can be prepared. If you have already attended a bankruptcy hearing, it may still be possible to propose an IVA. However, the IVA must account for bankruptcy costs, which may make the proposal considerably less attractive to creditors.

Once an IVA is in place, am I permitted to run my business?

You may generally continue to control your business without external influence, provided that you comply with all IVA terms and any reasonable requests from your IVA supervisor.

Would you explain the approval process for an IVA?

The process begins with the IP preparing an IVA proposal and issuing it to your creditors. The proposal must be accepted by a minimum of 75 percent of your creditors based on the total value of your debt. The timeframe from IVA application completion to IVA approval may be as short as a few weeks provided that you’re able to quickly supply any requested documentation and information.

When you stop paying your creditors directly you are likely to fall into arrears (or fall further into arrears) with your accounts.

Will creditors be eager to accept my IVA?

Where a debtor is insolvent, the insolvency practitioner has constructed a fair proposal, and the creditors stand to obtain a better outcome than would be achieved by bankruptcy, the prospects for success are good. However, it certainly should not be assumed that creditor consent to an IVA is automatic and proposals are sometimes rejected.

What are the consequences of missing a monthly payment under an IVA?

Payment default might be considered non-compliance with IVA terms unless it occurred by agreement. Serious non-compliance (of any type) is likely to result in the IVA being ended by the Supervisor, allowing creditors to pursue collection actions, and which might result in bankruptcy proceedings. You may end up paying more money overall because much of the funds that you have contributed to the IVA could be consumed by the fees.

Will an IVA affect my credit rating?

While covered by an IVA, you’ll be subject to restrictions on taking additional unsecured credit including credit cards, store cards, and personal loans. A record regarding the IVA is placed on your credit file and will remain there for six years. This record will be visible to lenders, who may avoid lending to you on this basis.

Other lenders might charge a high-interest rate even if you have completed your IVA. Some lenders specialize in consumers with poor credit, providing them with mortgages and secured loans where mainstream lenders might not. Your IVA will also be recorded on a publicly accessible register of insolvencies.

What happens after the IVA concludes?

Sometime after your final IVA payment (and compliance with all other terms of your IVA), a Statement of Completion is issued by the Supervisor to The Insolvency Service and you will receive a copy. Only those unsecured debts which were covered by the IVA will be discharged at this point; any other debts that you have accrued will remain outstanding.