Like any insolvency process, an IVA has both advantages and disadvantages. Here are some benefits to consider when determining if an IVA is suitable for you:

• There are no upfront fees for establishing the IVA.
• If your IVA is approved, creditors who oppose your proposal or do not participate in the voting will still be bound by it.
• Once the IVA is approved, interest and charges are legally frozen as long as you maintain your payments.
• Your insolvency practitioner will assist you in preparing your proposal, including determining your household and personal spending limits based on creditor-acceptable guidelines.
• You make just one monthly payment. Your insolvency practitioner handles the administration and distribution of these payments.
• You will never be compelled to sell your home as part of an IVA.
• Upon successful completion of the IVA, any outstanding balance owed to your unsecured creditors included in the IVA will be written off.

As with any insolvency process, it’s important to consider the potential consequences of entering into an IVA. These include:

• Restrictions on your spending during the IVA term.
• Not all debts can be included in an IVA; for instance, student loans, child support, magistrate court fines, and social fund loans are excluded. However, you may be given an allowance to continue repaying these debts.
• Creditors have the right to reject your IVA proposal.
• If you receive any windfalls or inheritances exceeding £500 during the IVA term, you may be required to contribute these funds to the arrangement.
• Failure to make payments as agreed in the IVA can result in the arrangement failing. If your circumstances change, the Insolvency Practitioner (IP) can request creditors to consider an amended offer; however, if they refuse, the IVA may collapse.
• If your IVA fails, you may still be liable for the original amount owed to your creditors.
• IVAs are recorded on the Insolvency Register, which is accessible to the public.
• An IVA remains on your credit file for six years after acceptance, which could negatively impact your credit score.

An IVA generally lasts for five years. If you own a home, you may be required to release equity during the fifth year. If this is not feasible, the IVA may be extended by an additional 12 months.

Once completed, any remaining debt will be written off, and the IVA will be removed from your credit file after 12 months.

An IVA usually requires you to repay a portion of your debts over a specified timeframe, functioning as a legally binding agreement.

On the other hand, bankruptcy is a court order that eliminates your responsibility for debts, but it may result in the sale of your assets to repay creditors.

For more information on whether to consider an IVA or bankruptcy, please visit our page.

Typically, an IVA is a five-year agreement that requires you to repay a portion of your debts while legally safeguarding your assets.

In contrast, a Debt Relief Order (DRO) is much shorter, lasting only 12 months, and is designed for individuals with minimal assets and limited affordability.

For more details on whether to consider an IVA or a Debt Relief Order, please visit our page.

An IVA (Individual Voluntary Arrangement) is a formal agreement that offers legal protection from creditors, while a Debt Management Plan (DMP) is informal. Both options require you to make monthly repayments toward your debts.

Below, we outline additional similarities and differences to help you decide between an IVA and a Debt Management Plan.

IVA fees are incurred only if you choose to proceed with the solution and are included in your monthly payment rather than as an extra charge.

Your contributions to the IVA depend on your unique financial situation. One of our Financial Assessors will assist you in determining a suitable monthly payment based on the details you provide about your income and debts.

For more information about IVA costs and fees, please click here.