What is an IVA and how can it help?

An IVA (Individual Voluntary Arrangement) is a formal debt solution that could write off the unsecured debt you can't afford, as long as you commit to repaying as much as you can for an agreed time. Most IVAs last five years, although some are longer and a few are shorter. Your IVA will have to reach a successful conclusion before your unsecured debt is actually written off - and any unsecured debt that's not included in your IVA may still have to be repaid.

How can I apply for an IVA?

Because it's a legal agreement, you must apply for an IVA through a licensed Insolvency Practitioner (IP). Our in-house IPs can help you with your application.

However, first of all we'll have to make sure it's the right solution for you. When you call us, we'll talk you through all your options - and if we think another solution might be more appropriate, we'll let you know. If we believe an IVA is the best approach for you to take, we'll draw up an 'IVA proposal' that shows your lenders how we think your IVA should work out. If it's accepted by lenders who 'own' at least 75% of the debt, your IVA can begin.

How long does an IVA take?

Most IVAs last five years. However, depending on your circumstances, your IVA may be longer or shorter than this.

Although five years is the 'standard' length of time for an IVA, it is not uncommon for an IVA to last six years if the borrower can't release equity from their home, for example. And in some cases, an IVA could take less than five years if there is a good reason for it.

Would I qualify for an IVA?

You'll only qualify if you genuinely can't afford to repay your unsecured debts in full within a reasonable period of time. You must also be able to commit to regular monthly payments towards your debts.

Contrary to common belief, there isn't actually a certain level of debt you must have to qualify for an IVA. The most important thing is that you meet the above criteria. However, there are other things that could affect whether you qualify, so call our expert advisers on 0800 195 2714 to discuss your options.

How much would I pay each month?

Only what you can afford. Your new monthly payments on an IVA are calculated according to how much money you have left after you've paid your essential bills and taken care of your other living costs. Your lenders will expect you to pay as much as you can each month, so they may ask you to cut back in some areas if they think you're spending more than a reasonable amount.

We'll carry out regular reviews of your circumstances, so if your circumstances change, your monthly payments could change too (as long as your lenders agree).

What are the disadvantages of an IVA?

Like any debt solution, there are a few disadvantages to consider with an IVA. For example, your credit rating will be affected for six years after it starts, making obtaining further credit much more difficult during that time. You may find it more difficult to get a mortgage or find that the rates available to you are higher. And if you're a homeowner, you may be required to release some of the equity in your home towards the end of the agreement.