Question 1

What is an Individual Voluntary Arrangement (IVA)?

Accepted Answer

An Individual Voluntary Arrangement (IVA) is a legally binding agreement between an individual and their creditors to repay debts over a fixed period of time. It is a formal alternative to bankruptcy and allows individuals to make affordable monthly payments based on their income and expenditure.

Question 2

How does an IVA work?

Accepted Answer

Once an IVA is approved, a licensed insolvency practitioner acts as a supervisor and negotiates with creditors on behalf of the individual. A proposal is made to repay a portion of the debts over a set period, usually five years. If approved by creditors, the individual makes regular payments to the supervisor, who distributes the funds among the creditors.

Question 3

Who is eligible for an IVA?

Accepted Answer

An IVA is suitable for individuals who have unsecured debts, such as credit cards, personal loans, or overdrafts, and are struggling to meet their repayments. It is typically available to residents of England, Wales, and Northern Ireland who have a stable income and owe a minimum amount of debt, usually around £6,000.

Question 4

Will an IVA affect my credit rating?

Accepted Answer

Yes, entering into an IVA will have an impact on your credit rating. It will be recorded on your credit file for six years from the date it starts. This may make it more difficult to obtain credit during this period. However, an IVA can also provide an opportunity to rebuild your credit rating by demonstrating responsible financial behavior.

Question 5

Can I include all my debts in an IVA?

Accepted Answer

Most unsecured debts can be included in an IVA, such as credit cards, personal loans, store cards, and overdrafts. However, certain debts, such as secured loans, court fines, student loans, and child support payments, cannot be included.

Question 6

What happens if I miss an IVA payment?

Accepted Answer

It is crucial to make regular payments as agreed in the IVA. If you miss a payment, it could be considered a breach of the arrangement, and your creditors may take legal action against you. It is essential to communicate any difficulties with your supervisor as soon as possible to explore potential solutions.

Question 7

Can I keep my assets, such as my house or car, in an IVA?

Accepted Answer

In most cases, you can keep your assets, including your house and car, while in an IVA. However, if you have significant equity in your property, you may be required to release some of it to repay your creditors. Each case is unique, and it is best to discuss your specific circumstances with your insolvency practitioner.

Question 8

Can I continue to run my business while in an IVA?

Accepted Answer

Yes, you can continue to run your business while in an IVA. However, if you are a sole trader, your business income and expenses will be considered as part of the IVA proposal. It is important to disclose all relevant information about your business to your insolvency practitioner.

Question 9

How do I start the process of setting up an IVA?

Accepted Answer

To start the process of setting up an IVA, you should seek advice from a licensed insolvency practitioner. They will assess your financial situation, discuss the suitability of an IVA, and guide you through the necessary steps to propose the arrangement to your creditors.

Question 10

Does a MAPP affect my current mortgage?

Accepted Answer

A MAPP will have no affect on any current mortgage.