Using an IVA to End Debts for Good

IVAs are one of the most commonly used debt options in the UK today and since they are also one of the most frequently misrepresented debt solutions they merit a special, more accurate introduction here. If you are beginning to tackle debt problems, it is quite normal to want to know if, how and when the problems will end.

How can an IVA end my debt problems?

It is an agreement which is crucially designed to write off all the debts it covers at the end of its term - so you can begin afresh with a new debt-free life again. If you are struggling with debt repayments now, you may have wondered how you could ever reach the end of the problem. Individual Voluntary Arrangements give you an ‘end point’, a known date by which the debts they cover will end for good.

How do they work?

Very briefly, they are an individually arranged contract between yourself and the creditors, facilitated by a professional and licensed Insolvency Practitioner. Individual Voluntary Arrangements stop many consumers feeling they have lost control of their financial situation by implementing a manageable plan, stopping any phone calls and letters demanding repayment. However, the plan doesn’t necessarily run until the debt has been settled in full. It operates only over a certain lifespan, typically 5 years (although sometimes it can be longer). At the end of this lifespan, providing you have kept up with the repayments and general terms and conditions, the debts it applies to are then all written off. For more information about how to successfully complete this aspect, click here; for more online advice about other aspects of IVAs, click here.

It is important to realise though that Individual Voluntary Arrangements cannot apply in every case, nor to every type of debt and are still only one of a number of legally recognised ways to end problem debts. For all debt problems it is essential to gain impartial advice which takes your exact circumstances into account.

We offer IVA advice alongside our work with all the other major debt options and will give you our honest assessment of the best option for your unique situation.  We also recommend reading as much credible information as possible; for further factual online IVA advice, click here and for more information on other debt solutions click here.

Contact us for free confidential advice on 0800 234 3605 or click here to send an email.

Living with an IVA

Consumers considering an IVA usually have many questions about what life might be like during the lifespan of the agreement. There is a great deal of so-called IVA debt advice on the Internet, yet finding useful factual information can sometimes prove difficult. IVAs appear in the wording of the 1986 Insolvency Act Part VII, meaning they are a legal route of out of debt and there are strict rules around how they are arranged and conducted. These rules exist to provide a degree of protection to the consumer aiming to ensure the arrangement presents a genuinely workable rather than drastic solution. In essence, providing an Individual Voluntary Arrangement is properly arranged, it should represent a plan which has every reasonable chance of successful completion.

Creating a More Stable Lifestyle

Consumers may require help to address understandable concerns about what life with an IVA might be like, perhaps worrying whether they would be able to meet their own and any dependents needs. However, in reality the very nature of this solution means there is some recognition of your needs. You won’t see a table here of how much you must pay every month because IVAs are worked out on a case by case basis to make them workable in the consumer’s exact circumstances.

Instead, it should be arranged to ensure you have a very reasonable likelihood of meeting the repayments each month, rather than struggling to keep up with an excessively high amount in relation to your actual income. This is an important point due to the time-scale involved.

Working Towards a Debt Free Future

Although some consumers initially feel they want to repay ‘as much as they possibly can’, again it would not help matters if this involved trying to manage on a tremendously low budget in the long-term. Indeed, your Insolvency Practitioner must be satisfied that your proposal represents a realistic plan and as you can see, this does work in everyone’s best interests.

In the meantime, an IVA should allow you to journey through life with a new, workable repayment plan, without new interest or charges and of course all debts covered are written off at the end, even when it wasn’t possible to fully repay them. This is another important point - in many senses, there is a legal recognition that consumers should not have to remain in debt ‘for all time’ and there must be a way to prevent debts from continually escalating.

Your professional life should also not be impacted, as they are a relatively more private option - since the aim is to allow life to continue in as ‘normal’ a manner as possible. Here the effect could perhaps be described as something of a ‘circular concept’: in order to make regular repayments, you would of course need an arrangement which wouldn’t involve unnecessary disruption to your work life.

Independent IVA Debt Advice is Vital

Finally, you do need reliable advice - an Individual Voluntary Arrangement is not suitable for everyone, but again, in all circumstances there will be an established legal route out of debt that you could follow with appropriate professional support.

Contact the Debt Options team on 0800 234 6605 for confidential, empathetic advice - or click here to send an email. We work with IVAs and all other commonly used legal methods to end problem debts, and are able to give full support no matter which route is most appropriate.

IVA Myths

Online information about Individual Voluntary Arrangements can be confusing as a great deal of hearsay and myths about IVAs circulate on the Internet and in everyday life.  Sometimes, less scrupulous ‘debt management’ companies make wild promises or consumers post justifiable concerns about misleading ‘debt management’ claims.

We believe the best form of support is impartial, independent advice tailored to individual situations – and understanding the common myths about IVAs may help you before contacting us for in depth advice.

Myth: An IVA will ‘wipe out your debts by 95%’.

Reality: They typically won’t ‘erase’ as much as 95% of problem debts. Instead, an IVA will last 5 years or more, with a manageable repayment plan. At the end, debts they applied to are written off, but only if their terms and conditions have always been met. Be wary of any company offering inflated promises to ‘wipe out debts’.

Myth: An IVA is a ‘Government loophole’ to avoid paying back your debts.

Reality: IVAs were first introduced under Part VII of the 1986 Insolvency Act as a workable solution to individual insolvency and these days represent a routinely used legal debt solution to serious debt problems.

Myth: An IVA is a ‘new’ solution that can solve almost all debt problems.

Reality: Again, Individual Voluntary Arrangements came into insolvency law in 1986 and so, they are a well established and legal route to manage debts.  Figures from the government show that over 270,000 people have entered into an IVA since 1986.  Furthermore they don’t necessarily apply to every kind of problem debt. Individually tailored debt management advice is vital for a genuine assessment of whether they could apply to your particular debt problems. In Scotland, Trust Deeds operate in a similar manner and again, do seek independent advice on their suitability.

Myth: ‘The debt companies all charge massive extra fees’.

Reality: We would provide access to an Insolvency Practitioner whose fees would simply be incorporated into the monthly repayment plan instead, at highly competitive rates.

Myth: IVAs are more beneficial to the creditor than to the consumer.

Reality: Creditors may accept an IVA proposal because it could mean that they will receive more repayments than during a bankruptcy. However, there are key consumer advantages and the arrangements should reflect the individuals’ reasonable everyday living expenses.

Myth: The fees are higher than bankruptcy charges but you keep your home.

Reality: There are certain circumstances in which a homeowner’s equity may be excluded from the arrangement; but whatever the arrangement, the fees are often cheaper than bankruptcy.

For genuinely impartial IVA help, call us in confidence on 0800 234 3605 - we are not linked to any lender and will provide our honest assessment of all available debt options you could chose.

IVA Information

IVAs, or Individual Voluntary Arrangements , were first introduced to the UK in 1986 under Part VIII of the Insolvency Act 1986. An IVA is formal proposal for repayment of debts that is presented to creditors via an Insolvency Practitioner. IVAs usually relate only to the claims of unsecured creditors, and do not affect the claims of secured creditors. However, some IVAs do also cover the rights of secured creditors.

Read more: IVA Information

Debt problems in the UK

Debt problems are on the increase in the UK, with many consumers finding it hard to balance the demands of mortgage repayments, credit card debts and the everyday expenses of running a household. With many also dealing with the threat of redundancy or the pain of losing their jobs, it’s inevitable that debt problems in the UK are on the increase.

Read more: Debt problems in the UK