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How Does an IVA Work ?

An IVA is an Individual Voluntary Arrangement and if you feel that this may be the solution for you then you should discuss this in depth with a trained professional known as an Insolvency Practitioner (IP). An IVA could be suitable for you if you have debts of £15,000+ and are struggling to pay these back. They are a preferable alternative to declaring yourself bankrupt.

How do I arrange an IVA?

The first thing you should do is talk to a debt adviser regarding your circumstances as they may be able to suggest an alternative that would be more suited. You will then need to talk to and appoint an IP who will discuss with you your current finances and decide on how much you can afford to pay your creditors.

Once this has been decided they will write a formal proposal to give to your creditors that lists the amount you can pay back and the time frame that this will be completed by. At this point your creditors may request changes be made and a meeting will be held to discuss the proposal that you have made. You should note that 75% of your creditors must agree for the proposal to be accepted. When this happens the proposal is then legally binding.

What happens next?

Once the proposal has been agreed you will have to make the payments that were decided upon. It is important to remember that you are legally bound by the IVA agreement. Providing that you keep to this then your creditors will not be able to take any legal action on you which can be quite a relief to some. However this is only the case so long as you do not break the terms of the IVA. If you own your property then you may be required to release some of the equity for your creditors.

After your final payment has been made your IVA will be deemed to be complete. Remember though that the IVA will be listed on your credit history for a further year and can affect future credit.