Individual Voluntary Arrangement (IVA)
The Paymex Group specialises in providing an Individual Voluntary Arrangement Advisory Service to people struggling to repay debts through our debt specialist company, Baines & Ernst.
What is an Individual Voluntary Arrangement?
An Individual Voluntary Arrangement – also known as an IVA – is a legally binding contract with creditors that allows you to repay debts at rate you can afford over a fixed period of time.
When creditors agree to an IVA, they are agreeing to a reduced repayment rate and to write off any unsecured debts included in the arrangement that still exist at the end of the IVA term, which typically lasts 5 years.
Affordable repayments
IVAs are subject to creditor agreement, so once agreed and in place, repayments will be based on what you can realistically afford after you pay essential bills like rent / mortgage, utility bills, food and other secured debts. The amount you’re left with is called ‘disposable income’ and it is this amount that repayments are calculated from.
Your case will be handled by an Insolvency Practitioner who will act on your behalf to secure an affordable repayment rate and ensure you keep to the terms of the agreement.
Write off debt
Any unsecured debts that exist at the end of the IVA period will be written off.
If you are a homeowner, you could be asked to release equity from your home in the fourth year to help repay creditors. However, this will depend on your personal situation and will be discussed with you before you go ahead with an IVA.
Debt free in 5 years
Providing you keep to the terms of the agreement, an IVA will typically last for 5 years. After this time you will be free from the unsecured debts included in the Individual Voluntary Arrangement.
Interest and charges frozen
Creditors are obliged to freeze interest and charges on your accounts by law. This means that once your IVA begins, your debt level cannot increase.
Protection from creditors
IVAs are legally binding agreements, this means that creditors are no longer allowed to contact you and demand payment.
Do you qualify for an Individual Voluntary Arrangement?
IVAs are available to people who are struggling to repay debts and have:
- Three or more creditors
- Unsecured debts of £15,000 or more
- Proof of income
Criteria above should be used as a guide. For more information, complete the enquiry form and a member of the Paymex Group will get back to you.
IVAs are subject to creditor agreement, which is not always guaranteed. For an IVA to be approved, it must be accepted by 75% of the creditors (by value). Once in place – and providing you keep to the terms of the Individual Voluntary Arrangement – an IVA will protect you from creditors demanding repayment, interest and charges will be frozen and debts included in the agreement that still exist at the end of the IVA term (normally 5 years) will be written off.
If you fail to keep to the terms of the IVA, you could face serious repercussions, such as Bankruptcy.
Homeowners could be required to re-mortgage their property to release equity in the fourth year of the IVA to repay creditors, but this depends on personal circumstances.
Interested in becoming an Introducer to the Paymex Group? Visit our Introducers page.
