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.
- Mr M owed £23,438 to 6 different creditors and had contractual payments of around £600 each month.
- With earnings of £2,764 per month he was finding it difficult to pay.
- Alongside living costs which amounted to £2,540 per month (including rent / bills etc).
- He chose an IVA to help repay the debt.
- A proposal was put to his creditors in line with what he could afford at £224 per month.
- If Mr M had just offered £224 through an informal arrangement it would take 8.7 years to clear.
- Even longer if interest and charges were not frozen.
Before IVA Proposal
- Debt total – £23,438
- Contractual creditor payments – £600
- Realistic affordable payment – £224
- Time to repay debt in full at affordable payment – 8.7 years (assuming interest and charges frozen)
IVA Proposal
- Debt total – £23,438
- Contractual creditor payments – £600
- Realistic affordable payment – £224
- Time to repay debt 60 months
- Total Payable – £13,440
- IVA Fees – £3,650
Debt Reduced
- Debt write off – £13,648 (58.23%)
- Minimum time saving to repay – 3.7 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 unsecured 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 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 your 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 £1,000s.
Calls stopped
Once approved creditors cannot chase you about repayment of your debts, and this is all dealt with by the terms of your IVA.
Unsecured debt included
An IVA provides an arrangement that binds your unsecured debts obtained prior to the IVA. Even if some of your creditors don’t wish to accept the IVA, providing 75% in value of creditors who vote at the meeting accept the Arrangement they will be bound by it, even if they choose not to participate in considering your proposal. Please note there are some exceptions to debts which can be included in an IVA, as mentioned below.
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 in 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 a 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 to pay creditors that are not/cannot be included in your IVA including any secured creditors. 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. Debts not included in your IVA will not be written off and you will need to continue to make these payments.
Repaying your creditors
While the IVA agrees for some of your unsecured debt to be written off on successful 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 repayment to your debt, as well as a solution to the stress and strain of relying on credit. So obtaining further credit could severely impact your ability to maintain your repayments and the aim of a life free from credit. A record of your IVA will show with credit reference agencies for a minimum of six years from the date the IVA is approved.
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 95.35%*.
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.
* Based on our customers who proposed an IVA in January 2021 95.35% were accepted by creditors.
Will my creditors accept an IVA?
At Financial Support Systems we have helped thousands of people enter IVAs 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 95.35%* acceptance rate of proposals put to creditors and require 75% in value of creditors that consider your IVA to accept for it to be approved.
* Based on our customers who proposed an IVA in January 2021 95.35% were accepted by creditors.
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?
- Debt write off can be as much as 83.8% of your unsecured debt*
- Over 15 years experience across our companies
- A friendly, confidential & professional service
- Our Insolvency Practitioners are regulated and monitored by the Institute of Chartered Accountants in England and Wales
- 4.9 out of 5 on Feefo**
* Based upon our customers with IVAs approved in January 2021 10% will write off, on average 83.8% of their unsecured debt upon successful completion.
** Based on 363 independent verified Feefo reviews as of 10th March 2021, for the full details of these please click here.
Important Information
Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on successful 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 equity in their property, subject to certain criteria. If unable to release equity and equity is available an additional 12 months payments may be requested in compensation.
Financial Support Systems provides insolvency solutions to individuals, specialising in IVAs. We do not administer or provide advice relating to debt management products, such as Debt Management Plans. Advice and information on alternative options will be provided following an initial fact find where the individual(s) concerned meets the criteria for an IVA and wishes to pursue it further, as governed by our Insolvency Practitioners' regulators, the 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.
The Association of Business Recovery Professional, known as R3, produce a booklet called "Dealing with money worries - A guide to your options". This is a very helpful summary of the various options for dealing with debt and a copy can be found at the following link. Please also see link to 'Voluntary Arrangements - A Guide for Creditors on Insolvency Practitioner Fees'.