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Apply for an IVA: Could an IVA Solve Your Debt Problem?

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If you’re struggling with a debt problem, you might have come across Individual Voluntary Arrangements (IVAs). IVAs or any other debt solutions could be your doorway to a better financial situation. You might feel confident you can do it alone but if you’re missing monthly payments or finding yourself with no money at the end of the month, it might be time to look for debt advice.

What is an Individual Voluntary Arrangement?

An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between you and your creditors to repay your debts. It is a type of debt solution.

You work with an IVA Specialist who, in turn, would work with a highly qualified person called an Insolvency Practitioner, to create an IVA proposal to suggest to your creditors. If your creditors agree, then you’ll be legally bound to make those proposed monthly payments.

An IVA proposal is a new, realistic budget where you set out how much you can afford to repay each month. The repayment term is usually five years. If your creditors don’t think you can repay your debts before this time, then they may agree to your IVA proposal.

How can an IVA help me?

An IVA can help you to reduce your monthly payments, leaving you with more money left over at the end of the month.

It can also be beneficial to turn your debts into one affordable monthly payment rather than several. It means one payment coming out of your bank account, one creditor to deal with, and one interest rate. All these things could mean less stress for you.

How do I qualify for an IVA?

To qualify for an IVA, you must:

  • Have at least £6,000 in unsecured debts
  • Be able to afford some kind of monthly payments
  • Not be able to pay back your debts in a reasonable time
  • Live in England, Wales or Northern Ireland

How do I apply for an IVA online?

It’s quick and simple to apply for an IVA online. Most Individual Voluntary Arrangement providers offer online services now, so you just need to fill out an online application and then they’ll be in contact.

They’ll create the IVA proposal with you and then pass that through the Insolvency Practitioners to ensure it has the best chance of being accepted. Not all your creditors need to be in agreement, just 75% of them for the IVA to be successful.

It’s worth noting, that all debt solution companies will need you to give specific and detailed information which will involve a phone call at some point in the process.

How much debt do I need to be in to get an IVA?

To qualify for an IVA, you must have £6,000 or more in unsecured debt.

What is unsecured debt?

Unsecured debt is a debt that is not secured by an asset.

Secured loans or secured debt is credit such as mortgages, car finance, and homeowner loans – these loans are secured by an asset and you could lose the asset if you miss payments.

If you have less than £6,000 in debt, you might want to consider an alternative debt solution such as a Debt Management Plan (DMP).

Does an IVA write off debt?

You can write off debt with an Individual Voluntary Arrangement (IVA). Your IVA will usually be completed within 5-6 years depending on your circumstances, any debt left over will then be written off.

How will an IVA affect my credit rating?

All debt solutions will affect your credit file in some way. But if you’re struggling with debts and missing payments then these defaults will also be reported on your credit file and affect your credit rating.

An IVA will remain on your credit file for six years and you might be reluctant to sign up for anything that stays on your credit file for so long. But an IVA also shows lenders that you’re actively trying to repay your debts rather than ignoring the problem and this could help you in the long run.

What are the risks of an IVA?

There are risks with any debt solution and an Individual Voluntary Arrangement (IVA) is no different.

Risks of an IVA:

  • You can't borrow money while on an IVA
  • You might find it difficult to borrow money again after your IVA has finished
  • Although your assets are protected, if you're a homeowner you may be required to release equity on your home if you can't pay back a reasonable amount of the debts in the 5 year period

Struggling with debt?

If you’re struggling with debts whether they’re £6,000 or less, we might be able to help with an IVA or a Debt Management Plan. We’re a Debt Management company that specialises in confidential debt advice and helping people repay their debts.

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