What is an IVA?
An IVA (Individual Voluntary Arrangement) is a debt solution whereby you pay back your unsecured debts to your creditors in monthly repayments usually over a 5 to 6 year period. If your IVA successfully completes, the debts included in your IVA will be written off and you will be able to start afresh, debt free.
You will work with a debt advice provider (such as PayPlan) to review your income and expenditure and work with your creditors to arrange an affordable payment plan. If your creditors approve the proposal, they will not be able to contact you or charge you interest and fees during your IVA term.
Is it easy to be accepted for an IVA?
At PayPlan, we find that around 80-90% of IVAs are approved at the meeting stage. To get to this stage you will need to be clear with your debt adviser. This will enable them to put your best case forward and the more you can offer to your creditors, the better chance your IVA has of being accepted.
It might be the case that your creditors are not satisfied with the terms put forward from you and your debt adviser. This shouldn’t cause alarm initially, and there will be an opportunity to revise your offer and go back to them with a better monthly payment proposal.
Why might I be rejected for an IVA?
If your debt advice provider feels an IVA is not appropriate to your situation, then you may be advised to enter into an alternative debt solution. You also need to make sure your income and expenditure is accurate.
If you are deemed financially fit for an IVA by your debt advice provider, you may still be rejected for an IVA if your creditors do not agree to the proposal put forward to them. Of all of your creditors included in your IVA, at least 75% (by value) of the creditors who vote need to approve your IVA proposal, however you may be able to reapply if you are rejected.
How do I make sure my IVA is successful?
If you make all of your planned payments into your IVA on time, it is likely your IVA will complete successfully. Should you need to release equity in a property and extend your IVA by a further year, you can ensure your IVA is successful by keeping up with these terms for the extended 12-month period.
If you have a change in circumstances and let your debt advice provider know as soon as possible, your IVA will have a better chance of continuing. You may find your payments are reduced and your IVA is extended (subject to permission from your creditors) but this would still keep you on track to becoming debt free.
When can an IVA be unsuccessful?
If you fail to keep up with the agreed monthly repayments, this could put your IVA at serious risk of failure. Should your IVA fail, you will be back to square one and still in debt with your creditors. They will also be able to pursue you for payments and impose interest and fees onto your account once again.
The best thing to do if you think you are struggling to meet your payments is to contact your debt adviser straight away so they can try and help. They may be able to work with your creditors to lower your monthly payments, but please be aware that there is a chance this could prolong your IVA.
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