An IVA is available to all Individuals, Sole Traders and Partners ("the Debtor") who are experiencing difficulty in meeting contractual payments to their unsecured creditors. This is providing they have a stable income and a surplus each month after paying for basic living costs. Typically unsecured debts should total at least £15,000 and be owed to more than one creditor. Please contact Payplan for further advice.

Whether or not an IVA is accepted depends totally on how the creditors vote. An IVA will be accepted provided more than 75% of the creditors by value, vote in favour. If this is achieved, then the IVA is accepted and all unsecured creditors will be bound by the IVA.

An IVA must offer a higher return to creditors than would otherwise be expected were the debtor to go bankrupt.

Your creditors judge each application for an IVA on its own merits when they are considering their voting stance. Deciding factors may be: the value of assets, level of debt, monthly repayment offer, reason for the debt and newness of the debt.

Creditors will expect a high level of commitment from the debtor during the term of an IVA. Socialising, holidays, gifts, beauty treatments, gym membership or any form of savings are classed as luxury expenses and are typically not accepted by creditors as essential areas of expenditure.

Creditors also have their own criteria, which they expect an IVA proposal to meet if they are to vote in favour. The experienced Payplan staff deal with the main banks and credit card companies on a daily basis and make every effort to tailor a debtor's IVA proposal to meet the needs of the creditors involved.

Payplan do not charge up front fees to begin the IVA process. Fees vary according to the overall level of debt and are built into the regular monthly payments. A schedule showing the level of fees to be charged to an IVA is included within the proposal for you and your creditors to see.

Typically monthly payments are made over a period of no less than 5 years, although if assets are to be included, an IVA can be extended for a further 12 months.

Occasionally you may be in a position to make Full and Final offer to your creditors, this type of IVA would typically be for a period of 12 months.

An IVA will continue as long as regular payments are maintained. Defaulting on payments could result in the failure of the IVA at which point the debtor could either be back at the mercy of the creditors or be made bankrupt.

The following can be included:

• Bank accounts
• Finance company loans
• Credit or store cards
• Outstanding VAT
• Outstanding Inland Revenue debts
• Loans from friends and family

Outstanding Hire Purchase shortfall payments on goods that you no longer have (typically repossessions or write-offs)

You must however keep up full contractual payments to your Secured debts and other priority debts (see below), an allowance for which will be made in your expenditure schedule. 

Debts that cannot be included in an IVA are:

• Mortgages and loans secured on your property
• Hire Purchase Agreements (except shortfalls)
• Magistrates Court Fines, speeding/parking tickets etc
• Debts incurred through fraudulent activity
• Maintenance/CSA Arrears
• Arrears on a rental property (however you may be able to include outstanding rent on a previous property)

When considering an IVA, it is necessary to have a stable income that will last for the duration of the IVA, typically five years.

It is important to keep up payments as serious defaults can result in the failure of the IVA and may lead to bankruptcy.

However, there could be any number of reasons which can cause a reduction of income affecting your ability to keep up payments. Examples include illness, redundancy, relationship breakdowns, and bereavement.

The Supervisor of your IVA should be contacted immediately should any of these unfortunate incidences occur. A revised income and expenditure schedule will be requested, based on the change in circumstances. If necessary, the Supervisor will call a further meeting of creditors to request a change to the original payment plan.

During the term of the IVA, in an emergency situation, you may be allowed to miss up to two payments, but only with the Supervisor and creditors permission. Missing payments without permission is deemed a default of the IVA.

The Supervisor will undertake an annual income and expenditure review to ensure the monthly payments still reflect your surplus income.

You should keep the Supervisor informed of any changes during your IVA. If there is an increase in your surplus income, your Supervisor may request up to 50% of the additional surplus, to be added to your monthly payments.

Your IVA will include a 'windfall' clause. Any assets, including lottery wins, bonus payments, gifts or inheritance have to be declared to the Supervisor and paid into the IVA for the benefit of the creditors.

An IVA (Individual Voluntary Arrangement) is as the name suggests, individual to you. However if any of the debts were taken out in joint names, the other party will also be fully liable for that whole debt.

Your own liability for the joint debt will be taken care of by your IVA; however, the creditor can also pursue the other party for the full outstanding amount whilst your IVA is in place. Once your IVA has completed, the other party will remain liable for any remaining outstanding debt.

Unlike bankruptcy, IVAs are not published in your local paper. This is often a reason why people favour IVAs over bankruptcy as it is kept more private. Your IVA will however be noted on the Insolvency Register, held by the Insolvency Service. Any member of the public can access the Insolvency register via the Internet. Approved IVAs are also published in Stubbs Gazette, a magazine that can be requested by Insolvency Practitioners, finance companies and banks etc.

Your state pension won't be affected by entering into an IVA, however your personal pension payments may be. Creditors may vote with a modification asking you to suspend payments to a personal pension for the duration of the IVA. You would then be expected to pay this monthly amount into the IVA.

Not all pensions allow a five year suspension of payments, so if such a modification is proposed, your Supervisor will request a copy of your Pension Terms to see if this applies to you.

If you are able to comply to such a modification and there is a very good reason for you to continue contributing into your pension, it may be possible for the Supervisor to negotiate with the creditors on your behalf to find a compromise.

No. - To be nominated for an IVA (which are regulated by the Insolvency Act 1986) you will need the services of a licensed Insolvency Practitioner (IP). The IP will also supervise and review your IVA throughout the duration of the Arrangement.

If you own a property, creditors would expect a proportion of any equity to be realised and paid into the IVA at the end, for the benefit of the creditors. Typically this would be up to 75% of your share of the equity.

If you have negative equity or zero equity at the beginning of an IVA, creditors may ask for a valuation of the property in the fourth year of the IVA with 75% of your share of any equity at that point, which will need to be realised and paid into the Arrangement at the end.

No, an IVA is legally binding as long as you keep up payments and co-operate with the Supervisor when asked to do so. Once an IVA has been approved, your creditors have no legal right to pursue you outside of the IVA, so letters and phone calls should stop.

An Interim Order prevents your creditors from taking or continuing any legal action against you. If you have any pending court action relating to your unsecured debts, your Insolvency Practitioner may apply for an Interim Order to stop this while the proposals for your IVA are being prepared.

Whilst your IVA proposals are being prepared, you may be asked to change bank accounts. This is because the banks have something called the "Right to Off-Set" which entitles them to remove money from your bank account to "off-set" against unsecured borrowings you may have with a 'linked' account such as a personal loan and/or credit card.

With a number of the large banks merging over the last 20 years, it can be confusing to know if companies are linked, so we have detailed the main ones and their subsidiaries here (Linked Creditors).

By opening a new basic bank account and using a company with whom you have no financial ties, you can ensure that your income will be safe.

If you already have an independent bank account, with no borrowings or overdraft facility, it should not be necessary to change.

Payplan is a well-established and respected company who have been providing debt solutions for over 13 years.

Payplan work closely with charities such as National Debt Line who help people who have unmanageable debts. Major banks and credit card companies refer clients to us for help; click here for a list of our supporters who recognise the need for Payplan's practical and impartial advice backed by many years of specialist debt management experience.