Individual Voluntary Arrangement

What is an Individual Voluntary Arrangement?
Specifically for people with debt problems an Individual Voluntary Arrangement is a legally binding agreement between you (the debtor) and your creditors (people you owe money to). In most cases you are entering into an agreement to pay an agreed monthly sum to the Insolvency Practitioner who acts as a Supervisor. The Supervisor will then distribute these funds to the debtor’s creditors. Unlike debt management schemes the IVA is normally in full and final settlement of all debts. IVA’s generally last for a period of between three to five years.

Will I be charged any upfront fees?
Not by Just-Debts. We offer free debt advice. If we think an IVA is the best option for you we will advise you of that. You make the decision. The fees for the Individual Voluntary Arrangement come out of the money that you pay in to the scheme for your creditors and the creditors must agree to this. In reality if your creditors are receiving less than 100 pence in the pound, they are paying for the Individual Voluntary Arrangement.

Is there a quick guideline to assess whether or not an Individual Voluntary Arrangement is the right approach?
There are a number of factors to take into account. Generally, however, if the answer to the following four questions is yes, an Individual Voluntary Arrangement is something you should consider.

Do you own your own home?
Do you have unsecured debts of more than £20,000?
Do you earn more than £15,000 per annum?
Are you currently paying unsecured creditors, i.e. credit cards/store cards more than £300 per month?

If this applies to you call Just-Debts on free phone 0800 915 3950 for a free consultation.

An Individual Voluntary Arrangement is probably not appropriate for you if;

You do not own your own home
Your main source of income is State Benefit
You currently have less than £200 per month available to pay to your unsecured creditors once you have taken into account all of your reasonable living expenses.

Even if you consider that you fall into the above category there are other solutions that may be more appropriate for you. Just-Debts will provide you with free advice phone 0800 915 3950.

What does the Individual Voluntary Arrangement Do?
Once approved by your creditors the Individual Voluntary Arrangement will stop further interest accruing on your unsecured debts. Instead of having to deal with your credit cards/store card debt card by card, you will have one agreed monthly sum that you know you can afford to pay. Creditors who have previously been pursuing you will be bound into the Individual Voluntary Arrangement. The way to a successful Individual Voluntary Arrangement is through a proposal with an affordable monthly payment that is fair to you and your creditors.

Would I have to pay back my creditors in full?
In most cases no. The purpose of the Individual Voluntary Arrangement is to reach a full and final settlement over an agreed period, usually three to five years. The amount that you pay each month is dependent on your income and normal outgoings. By putting a formal proposal to your creditors you are disclosing to them your financial position. Creditors are realistic. If they know that there is not enough money to pay them back in full then they will normally agree to the Individual Voluntary Arrangement.

Does an IVA protect my house?
The Individual Voluntary Arrangement will deal with your unsecured creditors. Most people have a mortgage on their home. The bank or building society take a mortgage on the home to protect their position. They are known as secured creditors. The main reason debtors choose Individual Voluntary Arrangement as opposed to bankruptcy is to protect their home. The Individual Voluntary Arrangement proposal will make provision to pay the secured creditors in the normal way throughout the period of the Arrangement. When calculating the amount that you have available for your creditors, the mortgage repayments are always taken into account. Even if you have mortgage debt problems, an Individual Voluntary Arrangement may still be possible.

For more information contact Just-Debts on free phone 0800 915 3950 for free debt advice and to take the first step to resolving your debt problems.