How Can An IVA Benefit Me?

How could an IVA help me?

If you are struggling to maintain payments to your creditors, an IVA can help you secure an agreement to pay what you can afford over a reasonable time of usually 5 years, writing off the debt you cant afford to pay in that time on successful completion.

Below is a real case example of how we have assisted someone in gaining a realistic repayment arrangement with their creditors through an IVA and detailed some benefits for you to review.

  • Miss T owed £20,000 to 8 different creditors and had contractual payments of around £500 each month.
  • With earnings of only £1160 per month she was finding it difficult to pay.
  • Alongside her living costs which amounted to £820 per month (including rent / bills etc).
  • She chose an IVA to help her repay the debt
  • A proposal was put to her creditors in line with what she could afford at £180 per month.
  • If Miss T had just offered £180 through an informal arrangement it would take 9 years to clear
  • Even longer if interest and charges were not frozen.

Before IVA Proposal

  • Debt total – £20,000
  • Contractual creditor payments – £500
  • Realistic affordable payment – £180
  • Time to repay debt in full at affordable payment – 9 years (assuming interest and charges frozen)

IVA Proposal

  • Debt total – £20,000
  • Contractual creditor payments – £500
  • Realistic affordable payment – £180
  • Time to repay debt 60 months
  • Total Payable – £10,800

Debt Reduced

  • Debt write off – £9,200 (46%)
  • Minimum time saving to repay – 4 years.

What are the benefits of an IVA?

Reducing your debts

An IVA will typically allow you to write off between 30 and 90% of your debt. This figure is dependent on your own personal circumstances and the payments you can afford to make. Upon successful completion of the IVA your creditors agree to write off any remaining debt and will update your accounts as satisfied with a £0 balance and they cannot pursue you for any further repayment.

Affordable payments

An IVA is put together using a set of guidelines for your general living costs to ensure that you can maintain priority bills like you rent/mortgage and utilities as well as providing a reasonable standard of living for you with provisions made for items like Food, Clothing, Travel etc

No more interest and charges

As part of the agreement with your creditors, they are legally bound to freeze all interest and charges applied to your accounts from the date the IVA is agreed. With average credit card interest at around 17.9% APR this alone could reduce the debt you pay by £1,000’s.

Calls and letters stopped

Once approved creditors cannot contact you about your debts or repayment of them and this is all dealt with by the terms of your IVA.

All unsecured debt included

An IVA provides an arrangement that binds all of your unsecured debts. Even if some of your creditors don’t wish to accept the IVA, providing just 75% in value accept the Arrangement all creditors are bound by it, even if they choose not to participate in considering your proposal.

Avoid Bankruptcy

An IVA is an agreement that you have reached with your creditors to repay your debt and providing you maintain the agreed payments the creditors included the IVA cannot make you bankrupt. Bankruptcy could mean you lose assets such as your home or car.

What should I consider when thinking about an IVA?

The team at Financial Support Systems understand choosing how to deal with your debts is big decision and we recognise that it is important you consider all of the facts. Although an IVA offers many benefits, all circumstances are different, so below are some things you may want to take in to account:

Not all Debts are Included

It is your responsibility to ensure that you continue pay creditors that are not/cannot be included in your IVA. Failure to pay any taxes, fines, child support payments and other debts outside of your IVA could result in a loss of access to essential goods or services or repossession of, or eviction from, your home.

Repaying your creditors

While the IVA agrees for some of your debt to be written off on completion of the arrangement, you are expected to repay as much as you can reasonably afford. If you come in to into extra money during the IVA, you may be expected to contribute this, in part at least, into the IVA for the benefit of your creditors.

A legally binding Agreement

Once your IVA is approved you are bound into a formal Insolvency procedure and obligated to maintain the terms of the arrangement. Your participation in an IVA is entered onto a public register.

Expenditure

You will be subject to a budget which you will agree with our advisors. This can be reviewed if there is a change in circumstances.

Effect on your ability to Obtain Credit

Whilst in an IVA you are normally not allowed to obtain any further credit. The main purpose of an IVA is to provide an agreement for an affordable repayent to your debt, as well as a solution to the stress and strain of relying on credit. So obtaining further credit could severley impact your ability to maintain your repayments and the aim to gain you a life free from credit debt. A record of your IVA will be retained by credit reference agencies for a minimum of six years.

Creditors required to accept

There is no guarantee your IVA application will be accepted by your creditors. However we only put forward cases we feel have a high chance of success and typically achieve a success rate of over 92%.

Possible Bankruptcy

While an IVA is designed to protect you from bankruptcy proceedings – should it fail and you do not make alternative arrangements with your creditors, you may be made bankrupt but this is unusual and dependent on your circumstances.

Will my creditors accept an IVA?

At Financial Support Systems we have helped thousands of people enter IVAs with their debts and assisted them in regaining control of their finances. We would not put a proposal forward to your creditors if we didn’t feel it had a great chance of being accepted, we generally achieve a 94% acceptance rate of proposals put to creditors and only require 75% in value of creditors that consider your IVA to accept for it to be approved.

How do I apply for an IVA?

Simply contact us and one of our trained assessors will discuss your situation and requirements. If an IVA is a suitable solution and you wish to go ahead we can do rest.

Why choose us for support?

    • 94% of IVA’s we propose are accepted by creditors
    • Over 15 years experience
    • A friendly, confidential & professional service
    • Regulated and monitored by the Institute of Chartered Accountants in England and Wales
    • 4.6 out of 5 on Google Reviews
    • 100% of customers would recommend us to a friend*

*Review scores correct as at 9th July 2019

Important Information

Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on completion of an IVA. If your IVA fails, it could lead to Bankruptcy, although this is rare and alternatives may be available. Your ability to obtain credit will be affected for the medium to long term. Homeowners may be required to release the equity in their property, if unable to release equity and equity is available creditors may request an additional 12 months payments in compensation. 

Financial Support Systems provides insolvency solutions to individuals, specialising in IVA's. We do not administer or provide advice solely relating to debt management products, such as Debt Management Plans. Advice and information on alternative options will be provided following an initial fact find were the individual(s) concerned meets the criteria for an IVA and wishes to pursue it further, as governed by our regulators Institute of Chartered Accountants in England and Wales. All advice given on any alternative options is therefore provided in reasonable contemplation of an insolvency appointment. 

The Money Advice Service is a free service set up by the Government to help people make the most of their money. If you would like to learn more click here.

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