IVA – When switching from a Debt Management Plan due to legal action

An Individual Voluntary Arrangement (IVA) is normally a five-year agreement with your unsecured creditors that helps you avoid bankruptcy. You get protection from those creditors and you only pay back a proportion of your unsecured debts and write the rest off.

If you’re worried about your debts, PayPlan can help you. You can call us now on 0800 280 2816 or, if you’d prefer, click the “Get help now” button to request a call back.

PayPlan help all kinds of people in debt

Over the last twenty years, PayPlan have helped millions of people who were having difficulty in paying their debts.

Everyone’s circumstances are unique, and our experienced advisers will be able to suggest next steps for you no matter what your financial situation.

This page outlines a very specific case study: where a client was able to switch from his Debt Management Plan, avoid bankruptcy, and then repay only a proportion of his unsecured debts after we set up an IVA for him.

IVA case study – switching from a Debt Management Plan due to legal action

We helped a self-employed taxi driver set up a Debt Management Plan (DMP). He owed £20,000, mainly on unsecured loans and credit cards but he also owed some tax arrears.

After his living costs, he could afford to make a monthly payment of £300 to his debts. He owned his own home where he lived with his wife and child. He originally preferred a DMP as he felt he could pay his debts back in full. However, even though creditors typically do not take legal action when a client is in a DMP, the tax authorities were threatening to make the client bankrupt.   

If he was made bankrupt, then he would lose his home and also his taxi.

As soon as we were aware of this, we reviewed the client’s debt solution options with them. The client decided to proceed with an IVA, which would result in all legal action being stopped and the tax arrears being included in the IVA.

The client retained their home, their taxi and continued trading.

An IVA may help you if you wish to switch from a Debt Management Plan due to legal action

Are you serious about getting out of debt?

Successfully completing an IVA means avoiding bankruptcy and not having to deal with any more unsecured creditor demands for payment. You’ll normally make just one affordable payment for a set period of time, and creditors included in the IVA must freeze interest and charges at the point your IVA is agreed.

Become a PayPlan IVA client and you get:

  • A personal debt adviser to handle your IVA case
  • Just one regular payment to make, based on what you can afford to pay
  • All the support of a company who have, over the last twenty years, helped tens of thousands of people achieve debt-free status through an IVA
  • After the agreed IVA period, whatever unsecured debt remains is written off

And remember, at PayPlan, we do not charge any upfront fees for setting up an IVA.

However you must bear in mind that if you were, for whatever reason, to stop making payments to your IVA then your plan may fail; in which case your creditors may re-apply interest and charges (which were frozen at the point your IVA was approved) or may even petition for your bankruptcy. 

Want to avoid bankruptcy? Think an IVA could help you manage your debts more affordably? Many people choose to call us on 0800 280 2816 for free no-obligation debt advice, while others prefer to fill in our online Debt Help form so we can call them back.