The Facts: IVAs

Written by PayPlan on 4 December 2017

Here at PayPlan, we always want to offer a solution which is best suited to you. That’s why we are creating a series of blog posts which are aimed at giving you all the information you need about the different kinds of debt solutions we offer.

Our trained advisors are always on hand to offer you the best advice, and to make sure that you get the right debt solution.

What is an IVA?

An individual voluntary arrangement (IVA) – it is a legal (statutory) arrangement between you and your creditors, which is overseen (supervised) by a licenced Insolvency Practitioner. In most cases, to be able to have an IVA your debts should total at least £7,000 and be owed to at least two creditors. You can discuss which debt solution is best for you by contacting PayPlan.

How long do they last?

Normally, payments are made into an IVA over a period of 60 months (5 years). However, an IVA may be extended to six years if you own your home and it has equity. Alternatively you may be in a position to make a ‘Full and Final’ payment to your creditors. This type of IVA would normally be over a maximum period of 12 months.

How much does it cost?

Unlike some companies that provide IVAs, PayPlan does not charge upfront arrangement or assessment fees. You only start paying the IVA fees once your arrangement is agreed. Which means, that if for any reason creditors reject your proposal or you choose not to progress, you won’t have to pay for the work that we’ve done to set things up for you.

Once you’re in an IVA you pay a monthly repayment which covers both the agreed payments to your creditors as well as the Nominee’s and Supervisor’s fees involved in managing an IVA. This means that the payments remain affordable for you.

IVA Pros: IVA Cons:
Debt write-off
  • On completion of your IVA, any remaining unsecured debt is written off
Creditor Contact
  • PayPlan will manage your arrangement and liaise with your creditors on your behalf
  • Creditors can no longer chase you for payments
  • Creditors can’t take further action on your accounts
  • However, you will still receive default notices
Interest & Charges
  • All interest & charges are frozen on debts within the IVA
Flexibility
  • Your IVA is reviewed annually
  • If you have a significant change in circumstances, we can call a variation meeting, where creditors are asked to agree a new proposal
  • Your home will be protected by the IVA and vehicles are usually protected
  • If you are self-employed an additional pro is that you can continue to trade your business.
Publication
  • Your IVA is entered on the public individual insolvency register for the duration of your IVA
Implications
  • May affect future employment – certain professions will not employ or admit individuals in a form of insolvency (financial services for example)
  • May affect tenancy & mortgage applications/contracts
Failure
  • If you fail to adhere to the IVA proposal, it will fail and you could be made bankrupt (very rare)
  • Creditors may add on any interest and charges that accrued over the term of the IVA if it fails Credit Rating
  • The IVA will be placed on your credit file for 6 years from the date of the approval or for the duration of the IVA, whichever is the later.
Property Acquired After
  • Any property of significant value which is acquired during the IVA period may need to be paid into the arrangement.
Other useful facts:
  • Creditors will vote on your IVA application
  • Equity Clause is designed to protect your property so you can keep it
  • If 85% of your share of equity is less than £5000, you will not be asked to re-mortgage or extend the term of the IVA.

For immediate and free debt advice please call PayPlan free on 0808 250 9543 or use our Debt Help Form to submit your debt problem online.

Filed under Debt Facts

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

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