Everything you should know about an IVA

IVAs can be a manageable solution for those struggling with debt, without having to resort to selling their property. But how does it work? Here’s our guide to everything you should know about IVAs and who they’re suited to.

How Does an IVA Work?

IVAs are a similar form of insolvency, like bankruptcy, but they work in a different way. IVAs must be prepared by an insolvency practitioner who is qualified to deal with creditors on behalf of their clients. Someone deciding to get an IVA will work out a repayment plan with an insolvency practitioner, which is then presented to the creditors.

If everyone agrees to the details, the agreement becomes legally binding, and all parties need to adhere to it. This means you must make the monthly payments agreed in the plan. Providing all payments are made over the course of the IVA, any remaining debt is written off at the end of the plan. IVAs usually last between 5-6 years, depending on your circumstances and the size of the debts. Once complete, you’ll be issued with a completion certificate and your IVA record should be removed from the insolvency register.

Who is Eligible?

IVAs can be taken out if you have some spare income every month to cover the repayment, and they’re usually used by people with a significant amount of debt. There’s a range of debts that may qualify for an IVA, from personal loans and rent arrears to mortgage shortfalls and court fines.

Is it Right for You?

IVAs can be a flexible option, allowing you as much time as you need to repay numerous debts, and it can result in your monthly debt repayments being reduced by as much as 70%. You won’t need to worry about creditor actions like petitioning for bankruptcy or auctioning your property, as you’ll have protection against this, which can be a welcome relief. IVAs also give you a fresh financial start at the end, although they can last several years. However, naturally, there are considerations to make and they’re not right for every set of circumstances, so discuss your situation with your insolvency practitioner to be sure.

It’s important to consider all options before handling your debt with an IVA – speak to the team at Frost Group for advice and guidance on whether an IVA would be the best option for your financial situation.

‍