An iva (Individual Voluntary Arrangement) is a formal debt solution designed to help individuals struggling with unmanageable debt. It allows you to make affordable monthly payments over a fixed period, usually five to six years, after which any remaining debt is written off.

How Does an IVA Work?

An IVA is a legally binding agreement between you and your creditors, facilitated by an Insolvency Practitioner (IP). Here’s how it works:

1. Assessment – A licensed IP evaluates your financial situation to determine if an IVA is suitable.

2. Proposal – A repayment plan is drafted and presented to creditors.

3. Approval – If 75% (by debt value) of creditors agree, the IVA becomes binding on all parties.

4. Payments – You make fixed monthly payments for the agreed term.

5. Completion – After the term ends, any remaining debt is cleared, and you receive a completion certificate.

Key Benefits of an IVA

• Debt Write-Off – Any remaining debt after the term is legally written off.

• Legal Protection – Creditors cannot take further action once the IVA is approved.

• Single Payment – You make one manageable payment each month.

• No Asset Risk – Unlike bankruptcy, you can keep your home if agreed upon.

Who Is Eligible for an IVA?

To qualify for an IVA, you must:

• Owe at least £6,000 in unsecured debts.

• Have a steady income to make monthly payments.

• Be unable to repay debts in full within a reasonable time.

Does an IVA Affect Your Credit Score?

Yes, an IVA will impact your credit rating and remain on your file for six years. However, it can be a stepping stone to rebuilding your financial health.

Final Thoughts

An IVA offers a structured way to manage overwhelming debt while avoiding bankruptcy. If you're struggling with repayments, seeking professional advice can help determine if an IVA is the right solution for you.

Would you like more details on any specific aspect of an iva? Let us know!