What is an Individual Voluntary Arrangement (IVA)?
An IVA is a contract between someone that owes money on unsecured loans they are unlikely to afford to repay in full, and their creditors. Such loans include credit and store cards, personal loans, overdrafts, catalogues, payday loans and mortgage shortfall debts.
An IVA is legally binding on both the individual and the creditors, interest is frozen at the time it commences and, after five years, provided all the terms have been met, any debt outstanding is written off and the borrower is debt free.
How much do you have to pay into an IVA?
The person’s income and expenditure should be assessed using industry set guidelines to see what they can realistically afford to offer into the IVA each month.
There is no set figure, each case is determined upon its merits. It is not unusual for someone with debts of £30,000 to pay just £250 per month into an IVA.
The IVA can last for between 3 and 5 years and contributions are normally paid monthly. However a one-off lump sum payment can also be made without the need to make the monthly payments.
Are there any fees for an IVA and if so who pays them?
There are both ‘nominee’ and ‘supervisor’ fees. The nominee’s fee is for preparing the paperwork, holding the creditors meeting, which the individual rarely attends, whilst the supervisor’s fee is for overseeing the IVA. Both are set by the creditors and are taken from the contributions paid into the IVA each month.
With DebtWizard.com they are taken from the monthly contributions, payment is not requested up front.
To find out if an IVA is right for you and find more Q & As on IVAs, basic procedure, how the voting works and much more besides, then look at the following helpful articles: