IVA

Firstly what is an IVA?

IVA, or individual voluntary arrangement, is a formal, legally binding agreement between the lender and the creditor to make reduced payments towards the amount owed for a fixed period of time (generally about 5 years).

Due to the legal nature of individual voluntary arrangements (IVA) they need to be set up by an insolvency practitioner.

How do IVA’s work?

Individual voluntary arrangements work by settling all the debts over a fixed period of time (normally 5 years). Creditors are stopped from adding interest or late payment charges to the total debt. Also creditors are stopped from demanding additional payments.

The monthly payments that are paid in an Individual Voluntary Arrangement (IVA) are calculated on an affordable disposable monthly income basis. This is calculated by subtracting your total outgoings away from your income. After the final payment has been made your debt is legally written off. This means that IVA’s can write off up to 75% of your debts (subject to your circumstances).