What is an IVA?

An IVA (Individual Voluntary Agreement) is, when you are heavily in debt and need to come to an arrangement with your creditors to repay money owed to them. It is enforceable by the Insolvency Act of 1986 and has the full force of English law. Once the pro’s and cons of an IVA have been discussed by your debt counselor and agreed to by you, we will start work on the IVA on your behalf.

Who can help me get an IVA?

A licensed Insolvency Practitioner usually prepares an IVA. Once in place you will have more control over your assets than declaring yourself bankrupt. The insolvency practitioner will prepare a written statement containing all your details e.g. creditor's details amount owed, your previous credit history and a statement of affairs stating your intent to pay your creditors. Once the proposal has been finished, your insolvency practitioner can apply for an interim order to stop further legal action against you. Your insolvency practitioner will then act as supervisor of your IVA, regularly conducting reviews and assuring payments are being made on time.

What are the long-term effects of an IVA?

If you default on your IVA, your insolvency practitioner is obliged to file for your bankruptcy.

What is bankruptcy and what are the effects?

Bankruptcy is not just an ‘easy option’, it does erase all the debts that you owe but it places financial restrictions on you for several years and all of your remaining assets are still split equally between your creditors.

A court will make a bankruptcy order when they have been petitioned either by you or a creditor for a debt of £750 or more. You must comply with your requests from the official receiver to compile a full list of your assets. You must stop using your bank/building society accounts and along with all credit cards. You must give your full co-operation or you may face the full force of the law.

Your home (whether mortgaged, freehold or leasehold) and all its contents are included in your estate, as are your life insurance policies and pension plans. A certain amount of your income may have to go towards paying your creditors too. You will be discharged from bankruptcy after twelve months. This means you are released from the debts owed at the start of bankruptcy procedure.

As you can see, bankruptcy is certainly not an ‘easy option’ and should be discussed thoroughly with one of our debt counsellors, as the effects of bankruptcy can be very long lasting.