What is an IVA?
An IVA (Individual Voluntary Arrangement) is a popular debt solution for people who cannot afford their unsecured debts but want to pay as much as they can realistically afford to them. Its growth as a solution for unmanageable debts has been significant over the last 10 Years.
Put simply it is a legally binding proposal of payment to your unsecured debts based on what you can realistically afford to pay over usually just 60 months. It allows you to put forward a fair and affordable offer of repayment to your creditors where there is no ability for you to repay them in full. It freezes interest and charges to ensure your unsecured debt included in the IVA cannot increase and protects you and your essential assets such as your home or car against any further collections activity by your creditors.
You are basically explaining to your creditors that you want to repay them but you can’t afford to make the full monthly payments and asking them to freeze interest and charges so that you can pay as much as you can afford over the next 60 months and then write off the rest that you can’t afford to repay.
Debt write off can be as much as 83.8% of your unsecured debt* depending on individual circumstances
* 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.
Will I Qualify for an IVA?
Whether an IVA is suitable depends on your personal circumstances but in short if you meet the basic criteria below it could be an option for you:
- You owe more than £6,000 of unsecured debts (either yourself or jointly with your partner)
- You owe money to two or more debts
- You have a regular income from benefits and/or employment and can afford to pay £100 or more to your creditors, or you have a lump sum to offer from savings, assets or investments.
- You are struggling to meet your contractual payments to your creditors each month.
- You are resident in England, Wales or Northern Ireland
Why choose us for support?
Financial Support Systems’ Licensed Insolvency Practitioners are authorised and regulated by the Institute of Chartered Accountants in England and Wales. With over 15 years’ experience across our companies, with Financial Support Systems operating since 2017, we’re perfectly placed to assist people in resolving their finances. We’ve helped 15,377* people in the UK start their journey towards financial freedom.
We hold customer satisfaction paramount to our success and believe in transparency and honesty in what we know can be a very difficult time.
- 95.35% of IVA’s we propose are accepted by creditors**
- A friendly, confidential & professional service
- Our Insolvency Practitioners are regulated and monitored by the ICAEW
* Based upon the number of live IVAs with FSS as at 02/02/2021.
** Based on our customers who proposed an IVA in January 2021 95.35% were accepted by creditors.
An IVA could help you – Call Today
Your ability to get finance is likely to be affected for the medium to long term due to adverse credit.
Debt write off can be as much as 83.8%* depending on individual circumstances
95.35%** of Financial Support Systems IVA’s are approved by creditors
* Based upon our customers with IVA approved in January 2021 10% will write off, on average 83.8% of their unsecured debt upon successful completion.
** Based on our customers who proposed an IVA in January 2021 95.35% were accepted by creditors.
Will an IVA cost less elsewhere?
As an IVA is based upon your affordability, the fees charged should be standard. IVA fees are charged from your monthly contributions and are negotiated and agreed with your creditors pre-acceptance of your proposal. Most creditors instruct large accountancy firms to act on their behalf and these firms have standardised acceptance criteria for fees. Put simply, regardless of which Practitioner you use, the fees charged for their services should be standard across the industry. It is important to be aware that other firms may act as lead generators for Insolvency Practitioners and may charge you broker fees for this process.
What will the monthly payment into my IVA be?
This would depend entirely on your personal circumstances. We would complete a full assessment of your income and expenditure using recognised guidelines to ensure that you had enough to repay all of your priority bills such as rent/mortgage and utilities etc as well as essential living expenses. Whatever is left over is known as your disposable income and this would be the amount you would have to pay into your IVA each month.
An IVA is always designed to be affordable and provide you with a reasonable standard of living before any offer of repayment is made, to ensure you have the best chance of completing it successfully.
Will I have to sell my home?
No. One of the many benefits of an IVA is that it allows you to carry on being the owner of your home, unlike bankruptcy, where it is very likely that you will be forced to sell your house and any other valuable assets. In an IVA you will be given allowances to keep repaying the mortgage and any other loans secured against your home before being expected to make payments to your unsecured creditors and therefore protects your home.
Will I have enough to live on whilst I am in an IVA?
Yes. The income and expenditure review we will conduct at the start of your IVA and at regular intervals during it will be based on recognised guidelines. These guidelines are there to ensure that you have enough money to maintain a reasonable standard of living before making payments into your IVA and cover items like clothing, hairdressing & food etc as well as your priority bills like rent and Mortgage. (See Expenditure Guidelines for more information)
Many people find that the experience of living by a clearly defined, reasonable budget whilst in an IVA is a positive one which enables them to learn how to manage their living costs without relying on further credit in the future.
How long will it take before my IVA is up and running?
This depends on your circumstances. It is important that all IVA proposals are prepared correctly and that your creditors are given the appropriate length of time to make a decision. As long as you provide all the documents we need to prepare your proposal quickly, we estimate that most IVAs will take no longer than 6 weeks to set up.
What is my annual review?
We will assess your incomings and outgoings to see if the payment that was originally set is still affordable. If you work, we will also assess your income and the payments you can afford to make.
How am I protected from creditor contact?
All creditors you have informed us of are bound by the terms of the IVA, even if they have not received notice of it. The Consumer Credit Act 1974 states that creditors should issue you with the following:
- Default Notice (section 87(1)) once you have fallen into arrears.
- Annual Statement (Section 77a) on each anniversary of account opening.
- Notice of Assignment (Section 82a) if the debt is sold to a 3rd party.
These letters are normal, and no action is needed. Your insolvency practitioner will deal with your creditors on your behalf.
How can I be sure my creditors will accept my IVA?
We can never be 100% sure that your creditors will accept your proposal. However, the vast majority of creditors are very aware of what an IVA is and are very clear about what they will and will not accept. For this reason, we can be reasonably confident about how they would be likely to view your proposal and will advise you accordingly. We will also assist you in preparing your proposal in line with the relevant protocols to ensure it has the best chance of success.
Will my creditors still chase me for payment once my IVA has been approved?
As long as you fulfill all of your obligations under the IVA, your creditors are legally bound not to take any further action against you for the recovery of the debt; this includes demands for payment through letters or phone calls. They are also legally obliged to freeze all interest and charges. In practice, this means that the only contact most people have from creditors once their IVA has been approved is a yearly statement, which your creditors are legally obliged to send to you.
Please note that in the early days of your IVA, lenders may still contact you while the arrangement is being set up. Please forward any correspondence you receive to us. If you receive any calls, advise you are in an IVA with Financial Support Systems and give them your reference number.
How does an IVA windfall work?
If you receive a windfall, such as in the form of an inheritance or another large amount of money, you must notify us as soon as possible.
Will I have to sell any of the things I own if I am in an IVA?
In most cases the answer to this question is no.
You do have to disclose all details of any assets you own to us. These can include your property, your car, any savings or investments or any valuable belongings. In most cases these will be excluded from the IVA in return for you agreeing to make a monthly payment to your creditors.
If you do have any valuable non-essential assets that can be easily sold, you may be expected to do so. This is because assets like this would be seized and sold by the Official Receiver if you were made bankrupt, which might mean that your creditors would be better off that way.
This situation is very rare and we would advise you accordingly. We would never propose an IVA for you without giving you all the facts and without your permission.
Will I lose my vehicle?
Your creditors understand that a car is essential for you to earn a living and for social and domestic purposes and, in most cases, it would be excluded from the IVA as long as it is worth less than £8,000. It may still be possible to retain a vehicle worth more than this depending on your circumstances and we would discuss this with you before proposing your IVA to creditors.
If your car is on hire purchase you would be given an allowance to maintain those payments whilst you are in the IVA. If the payments end during the term of your IVA, however, you may be expected to increase payments into your IVA as this is now disposable income you could afford to offer.
Can I keep my business?
The answer to this question is usually yes.
IVAs for people who are self-employed are slightly more complex and we would have a detailed discussion with you about what all your options are before you decide to proceed with an IVA.
Can I keep my bank account?
As long as you do not owe money to the company you bank with the answer is yes. If your bank is also one of your creditors it is likely they would freeze your account once they know that you are proposing an IVA, so we would advise you to change in those circumstances.
How much of my debt will be written off?
This definitely varies from person to person and is highly dependent on your own personal circumstances.
The amount that you will repay is your monthly payment multiplied by the length of your IVA (which is usually 60 months). Your creditors will allow a certain amount of that to cover the costs of running your IVA and the remainder will be paid to them. The remainder of your unsecured debt will be written off at the end of your IVA. Typically debt write-off can be anything between 30% and 90%.
What happens if not all of my creditors agree to the IVA?
Over 75% of your creditors (by value of money owed to them) who vote on your IVA need to agree in order for your IVA to be accepted. So, if you owe a total of £20,000 and all of your creditors vote, then £15,000 would need to accept. All creditors whether they voted in favour or not, would then be bound by the IVA, even those that don’t vote and choose to go with the majority.
We know how most creditors tend to vote and we would not propose an IVA that we did not feel had a realistic chance of being accepted.
What if my IVA is rejected by creditors?
We wouldn’t put forward an IVA proposal without being confident it would be accepted. Most rejections are due to a change in circumstances or something that comes to light at the creditors meeting that was not previously known. Around 95.35%* of the IVAs we propose have been approved. In the event of a rejection we would direct you to one of our trusted partners to advise you on what your next steps should be and alternative options that may be available to you.
*Based on our customers who proposed an IVA in January 2021 95.35% were accepted by creditors.
Can I obtain additional credit whilst I am in an IVA?
No. Your creditors will only agree to the IVA on the understanding that you will not obtain further credit. If you were to do so, this would be considered a breach of the Arrangement and could lead to it failing.
The situation is slightly more complicated when it comes to secured debts, such as mortgages and vehicle Hire Purchases, and we would advise you on a case by case basis.
What happens to my debt when my IVA ends?
As long as you have fulfilled all of your obligations under the IVA, all remaining unsecured debt included in the arrangement will be written off, your credit file will update these accounts as satisfied and you will be discharged from these liabilities. Your creditors therefore, will no longer be able to pursue you for any further repayment.
Will the IVA affect my job or my ability to hold public office?
In most cases no. This is one important aspect where an IVA differs from bankruptcy.
One important exception is that holders of a premises licence are not allowed to enter into an IVA.
Some companies, such as those in the finance industry, or legal sectors have restrictions on their employees entering into IVAs but this should be stated clearly in your contract of employment. We would recommend that you review your employment contract if you are unsure and we will advise you on this when you contact us.
What if my circumstances change whilst I am in an IVA?
Throughout the duration of your IVA your circumstances may change, this could either be for the better or worse. For example, you receive a promotion at work and your income increases it may lead to an increase in your monthly payments.
Likewise if your income were to reduce, we will review your payments to ensure they are sustainable. It is important that you contact us should any change in your circumstances occur.
If you have suffered a reduction in income or increase in expenditure and need to reduce your repayments then your Insolvency Practitioner can use discretion in most cases to grant a reduction in payments. Loss of income through unemployment which renders you unable to make even reduced payments can be dealt with by offering you a payment break.
In cases where a significant change has occurred or your Insolvency Practitioner does not have discretion under the terms of your arrangement it may be necessary to seek creditors agreement to reduce your payments or offer a short term break. It is also possible if you have successfully completed a large proportion of the term, to ask your creditors to conclude the Arrangement earlier than anticipated with payments made being accepted in full settlement of your debt where no short term improvement to your circumstances can be foreseen. However, if you do not maintain payments under the terms of your arrangement and cannot reach an adequate resolution with your Insolvency Practitioner and or creditors, your Insolvency Practitioner will be obliged to terminate your Arrangement and notify creditors that the Arrangement has been breached.
This is likely to mean that because a significant proportion of your payments will have been used to pay the costs of the Arrangement the amount you owe to your creditors may not have reduced. Your creditors will be able to recommence collection activity for the balance owed to them plus interest and costs.
How much will the IVA cost?
IVA costs are charged for the preparation of your proposal and the administration of the arrangement for the full term (usually 5 years) these costs are charged from the monthly contributions you make into the IVA and will are not in addition. Costs will only be recovered on approval of your arrangement and once you commence making payments to it.
The exact cost depends on your personal circumstances and what your creditors deem acceptable for us to charge. All costs will be disclosed to you in writing prior to proposing your IVA and any amendments to charges negotiated by your creditors will be reconfirmed with you before acceptance.
Do I really need an Insolvency Practitioner? Can’t I just propose the IVA myself?
An IVA is a legally binding offer of repayment to your creditors. This offer must be prepared with the help of a licensed Insolvency Practitioner who is regulated and authorised by a professional body and their practices governed by a set of standard rules and protocols. This ensures that it is accurate and fair and that everyone proposing an IVA is treated the same.
It is not legally possible to propose an IVA yourself.
Can I get an IVA?
Anyone who qualifies for an IVA has a right to propose one. It is then up to creditors whether they choose to accept or not. To qualify for an IVA you must:
• Have at least £6,000 of unsecured debt.
• Have at least 2 debts
• Be able to afford at least £100 per month towards your debts.
• Be unable to maintain your contractual payments
• Be unable to repay your debt in full in a reasonable time.
For the IVA to have a chance of acceptance it must offer your creditors a better return than bankruptcy.
A very important aspect of the service we provide is to complete a full assessment of your circumstances to establish whether the IVA is a suitable solution for you and likely to be accepted by your creditors.
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'.
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The service this company offers… changed my life! They were so kind and approachable and they helped me through every step, the staff in every department made my journey to a better financial future so smooth.. I can pay for the food shop now without a worry and I can help my daughter through uni, and I’ve slept soundly for the first time in years… thanks to the awsome people who helped me…
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