Individual Voluntary Arrangement (IVA)
At PennyPlan we can provide debt relief for UK residents through a debt solution called an individual voluntary arrangement, more commonly known as an IVA.
In fact, 81,199 people in 2021 alone chose an individual voluntary arrangement as the best debt solution for their circumstances.
Do I Qualify
For an IVA?
Individual Voluntary Arrangement (IVA)
At PennyPlan we can provide debt relief for UK residents through a debt solution called an individual voluntary arrangement, more commonly known as an IVA.
In fact, 81,199 people in 2021 alone chose an individual voluntary arrangement as the best debt solution for their circumstances.
Do I Qualify
For an IVA?
What is an IVA?
An IVA is a legally binding agreement between you and your creditors to pay back what you can afford of your debt over a set period of time, usually 5 years.
Your repayments will be based on what you can realistically afford to pay each month, taking into account your income, expenditure and any dependants you may have.
After your IVA is approved, all interest and charges are frozen.
Once you have completed your IVA, the remaining debt is written off.
This means that if you have £20,000 of debt and can only afford to repay £200 per month, at the end of your 5 year IVA term, £8,000 could be written off (40%).
What is an IVA?
An IVA is a legally binding agreement between you and your creditors to pay back what you can afford of your debt over a set period of time, usually 5 years.
Your repayments will be based on what you can realistically afford to pay each month, taking into account your income, expenditure and any dependants you may have.
After your IVA is approved, all interest and charges are frozen.
Once you have completed your IVA, the remaining debt is written off.
This means that if you have £20,000 of debt and can only afford to repay £200 per month, at the end of your 5 year IVA term, £8,000 could be written off (40%).
Example of an IVA
UNSECURED DEBTS
Your monthly repayments:
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Subject to creditor acceptance. Payment subject to individual circumstances.
Credit Rating may be affected. Fees apply, subject to individuals circumstances.
How does an individual voluntary arrangement (IVA) work?
The IVA process has a few stages before you enter an individual voluntary arrangement.
The first step in gaining debt advice is to find out if you qualify by taking our quick and free online assessment.
This gives both you and our advisors a brief understanding of your eligibility.
Once you have taken our brief assessment online, the next stage is to speak to one of our friendly advisors who will conduct a more in-depth financial assessment with you.
The assessment will include personal or financial information to help understand the best way to assist you. The assessment will also ensure that your household bills are taken into account, ensuring your repayment plan leaves enough money to stay up to date with such items.
The financial assessment also makes sure you have had the appropriate debt advice, making you aware of all solutions available to tackle your debt problems. It also gives you an idea of what your monthly payments could be.
If both you and the advisor agree that an IVA is the right solution for you, then the next stage will be to gather documentation to show creditors you do need the financial support an IVA brings.
It will also prove to creditors you can make the repayments proposed in the arrangement. After all, this plan is designed to help you get your finances back on track so you can become debt free.
Documentation needed to support the IVA application vary based on your own circumstances.
However, some documents are usually standard across all individual voluntary arrangements.
Now you are probably thinking, it is going to be an effort to gather everything I need!
Do not worry, our market-leading technology help make the process as easy as possible for you. With a few clicks of a button, you could have all the documentation you need sent directly to your account with us.
The documentation needed for most IVAs includes:
- Proof of income
- Bank statements (Proof of expenditure)
- Identification
- Evidence of debts included within the IVA
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Our software can help you send these items to us with a few clicks, so do not feel overwhelmed!
Once we have all the documentation, it is time to start putting together your IVA proposal to send to your creditors.
This is the contract we send to the people you owe money to, which will form the basis of your IVA.
It will include items such as your monthly payments, length of the IVA and any other conditions that have been agreed upon.
Once your IVA proposal is finalised and you have signed it, it is now time for us to send it to your creditors for their approval.
More often than not, there is not an actual IVA creditors meeting, and it is used more as a deadline for creditors to get their votes in.
For your IVA proposal to be approved we will need to ensure 75% of voting creditors agree to the terms.
Congratulations! You have now entered an IVA and have a clear, sustainable plan toward debt freedom.
Your chosen company will now act as an IVA supervisor for your arrangement. They will now manage your IVA on your behalf for the duration of its term.
You will make your first monthly payment once your IVA is approved. We then contact all your creditors on your behalf to inform them you have started your IVA.
As long as you maintain the terms of your IVA agreement, you have a clear timeframe of when your debt will be repaid and the remainder written off.
Once you have made your final payment, the remaining debt is wiped and you are debt free!
How does an individual voluntary arrangement (IVA) work?
The IVA process has a few stages before you enter an individual voluntary arrangement.
The first step in gaining debt advice is to find out if you qualify by taking our quick and free online assessment.
This gives both you and our advisors a brief understanding of your eligibility.
Once you have taken our brief assessment online, the next stage is to speak to one of our friendly advisors who will conduct a more in-depth financial assessment with you.
The assessment will include personal or financial information to help understand the best way to assist you. The assessment will also ensure that your household bills are taken into account, ensuring your repayment plan leaves enough money to stay up to date with such items.
The financial assessment also makes sure you have had the appropriate debt advice, making you aware of all solutions available to tackle your debt problems. It also gives you an idea of what your monthly payments could be.
If both you and the advisor agree that an IVA is the right solution for you, then the next stage will be to gather documentation to show creditors you do need the financial support an IVA brings.
It will also prove to creditors you can make the repayments proposed in the arrangement. After all, this plan is designed to help you get your finances back on track so you can become debt free.
Documentation needed to support the IVA application vary based on your own circumstances.
However, some documents are usually standard across all individual voluntary arrangements.
Now you are probably thinking, it is going to be an effort to gather everything I need!
Do not worry, our market-leading technology help make the process as easy as possible for you. With a few clicks of a button, you could have all the documentation you need sent directly to your account with us.
The documentation needed for most IVAs includes:
- Proof of income
- Bank statements (Proof of expenditure)
- Identification
- Evidence of debts included within the IVA
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Our software can help you send these items to us with a few clicks, so do not feel overwhelmed!
Once we have all the documentation, it is time to start putting together your IVA proposal to send to your creditors.
This is the contract we send to the people you owe money to, which will form the basis of your IVA.
It will include items such as your monthly payments, length of the IVA and any other conditions that have been agreed upon.
Once your IVA proposal is finalised and you have signed it, it is now time for us to send it to your creditors for their approval.
More often than not, there is not an actual IVA creditors meeting, and it is used more as a deadline for creditors to get their votes in.
For your IVA proposal to be approved we will need to ensure 75% of voting creditors agree to the terms.
Congratulations! You have now entered an IVA and have a clear, sustainable plan toward debt freedom.
Your chosen company will now act as an IVA supervisor for your arrangement. They will now manage your IVA on your behalf for the duration of its term.
You will make your first monthly payment once your IVA is approved. We then contact all your creditors on your behalf to inform them you have started your IVA.
As long as you maintain the terms of your IVA agreement, you have a clear timeframe of when your debt will be repaid and the remainder written off.
Once you have made your final payment, the remaining debt is wiped and you are debt free!
What debts can be included in an IVA?
Most debts that are not secured to an asset can be included in an IVA.
This includes:
- Credit Cards
- Personal Loans
- Catalogues
- Payday Loans
- Overdrafts
- Council Tax Arrears
- HMRC debts (including income tax)
- Previous rent arrears (not current address)
- Mortgage Shortfalls (if no longer in possession of the home
Debts that cannot be included:
- Child Maintenance
- Student Loans
- Secured Debts (i.e your mortgage)
- Car Finance (if you still have the car)
- Current mortgage or rent arrears
If you are unsure if a debt can be included in your IVA, our advisors will be more than happy to help.
What debts can be included in an IVA?
Most debts that are not secured to an asset can be included in an IVA.
This includes:
- Credit Cards
- Personal Loans
- Catalogues
- Payday Loans
- Overdrafts
- Council Tax Arrears
- HMRC debts (including income tax)
- Previous rent arrears (not current address)
- Mortgage Shortfalls (if no longer in possession of the home
Debts that cannot be included:
- Child Maintenance
- Student Loans
- Secured Debts (i.e your mortgage)
- Car Finance (if you still have the car)
- Current mortgage or rent arrears
If you are unsure if a debt can be included in your IVA, our advisors will be more than happy to help.
How does an IVA affect your life?
So an IVA sounds good so far, but now you’re wondering how it affects your everyday life right?
Like with any financial decision, there are important factors you must consider and weigh up how they will affect your current lifestyle.
Your job should not be affected by your IVA. You will still be able to work and earn an income as normal. If you are still concerned about how the IVA will affect your employment, then it could be a good idea to review your employment contract.
If you are self-employed, then your IVA should not have any effect on your business. You will be able to keep trading and make money as normal.
There are some exceptions to the rule however such as if you work in a bank handling large amounts of cash, or are a Chartered Accountant. In these cases, it is best to get advice from one of our advisors first.
When you own a home, it is something that is considered within an IVA. However, this doesn’t mean you will lose your home as a result of your IVA.
You will never be required to sell your home during individual voluntary arrangements.
If you have equity in your home, then towards the end of the IVA the creditors would expect you to attempt to release equity by way of remortgage or secured loan to pay towards the IVA. The reason being is that this helps creditors reduce the amount of debt they are expected to write off.
However, this is not always possible for several reasons such as age, affordability and a less desired credit rating. If this is the case and the attempt is unsuccessful, the IVA still moves forward without the release of equity.
It is possible to obtain a mortgage whilst on an IVA. However, it must be noted that it does reduce your chances of acquiring one.
Remortgages are also possible, but the rates could be less favourable and you may have to seek the services of a specialist mortgage lender.
You may wish to seek independent advice from a mortgage advisor beforehand for extra information.
Yes, it is possible to obtain car finance with an IVA. You would need to seek approval from your insolvency practitioner, as you would be accessing new credit agreements.
Your panel of lenders willing to offer you finance would be less, and your interest rates could be less favourable. It is, however, possible to renew or obtain car finance agreements.
Absolutely, you can still maintain a bank account whilst on an IVA. However, you will not be able to keep credit services such as an overdraft or credit card.
It is recommended that you change your bank accounts to a provider to who you owe no money to. This is because your bank has a ‘right to offset’ clause, meaning they can take it from your account to repay the debt without warning.
If you owe no money to your current banking provider, you may not need to move. However, if your current bank is one of your creditors then it is extremely recommended that you switch providers.
This includes if you owe money to any banks within their group. For example, Halifax and Lloyds are part of the same banking umbrella. Therefore they would be classed as the same entity.
Do not worry about all the various banks and groups, our advisors will be able to provide you with the necessary advice to make sure your funds are safe.
How does an IVA affect your life?
So an IVA sounds good so far, but now you’re wondering how it affects your everyday life right?
Like with any financial decision, there are important factors you must consider and weigh up how they will affect your current lifestyle.
Your job should not be affected by your IVA. You will still be able to work and earn an income as normal. If you are still concerned about how the IVA will affect your employment, then it could be a good idea to review your employment contract.
If you are self-employed, then your IVA should not have any effect on your business. You will be able to keep trading and make money as normal.
There are some exceptions to the rule however such as if you work in a bank handling large amounts of cash, or are a Chartered Accountant. In these cases, it is best to get advice from one of our advisors first.
When you own a home, it is something that is considered within an IVA. However, this doesn’t mean you will lose your home as a result of your IVA.
You will never be required to sell your home during individual voluntary arrangements.
If you have equity in your home, then towards the end of the IVA the creditors would expect you to attempt to release equity by way of remortgage or secured loan to pay towards the IVA. The reason being is that this helps creditors reduce the amount of debt they are expected to write off.
However, this is not always possible for several reasons such as age, affordability and a less desired credit rating. If this is the case and the attempt is unsuccessful, the IVA still moves forward without the release of equity.
It is possible to obtain a mortgage whilst on an IVA. However, it must be noted that it does reduce your chances of acquiring one.
Remortgages are also possible, but the rates could be less favourable and you may have to seek the services of a specialist mortgage lender.
You may wish to seek independent advice from a mortgage advisor beforehand for extra information.
Yes, it is possible to obtain car finance with an IVA. You would need to seek approval from your insolvency practitioner, as you would be accessing new credit agreements.
Your panel of lenders willing to offer you finance would be less, and your interest rates could be less favourable. It is, however, possible to renew or obtain car finance agreements.
Absolutely, you can still maintain a bank account whilst on an IVA. However, you will not be able to keep credit services such as an overdraft or credit card.
It is recommended that you change your bank accounts to a provider to who you owe no money to. This is because your bank has a ‘right to offset’ clause, meaning they can take it from your account to repay the debt without warning.
If you owe no money to your current banking provider, you may not need to move. However, if your current bank is one of your creditors then it is extremely recommended that you switch providers.
This includes if you owe money to any banks within their group. For example, Halifax and Lloyds are part of the same banking umbrella. Therefore they would be classed as the same entity.
Do not worry about all the various banks and groups, our advisors will be able to provide you with the necessary advice to make sure your funds are safe.
Positives and Negatives of an IVA
As with most repayment plans that consolidate debts, there are pros and cons of an IVA solution.
Advantages of an IVA
- One monthly repayment that covers all your unsecured debts
- A clear timeline of when you are debt free
- All interest and charges are frozen
- Upon completion of the IVA, any debt remaining is written off
- Creditors will not be able to contact you
- Creditors cannot take further action against you whilst in an IVA
Disadvantages of an IVA
- You will be restricted from obtaining further credit during the IVA
- An IVA will appear with credit reference agencies for six years
- If you do not keep up with the repayments, the arrangement could fail
- Your creditors have the right to reject your IVA proposal
- If you are a homeowner you could be asked to remortgage in your final year of the IVA
- If you come into a lump sum during the IVA, you could be asked to contribute some of the proceeds to the arrangement
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Positives and Negatives of an IVA
As with most repayment plans that consolidate debts, there are pros and cons of an IVA solution.
Advantages of an IVA
- One monthly repayment that covers all your unsecured debts
- A clear timeline of when you are debt free
- All interest and charges are frozen
- Upon completion of the IVA, any debt remaining is written off
- Creditors will not be able to contact you
- Creditors cannot take further action against you whilst in an IVA
Disadvantages of an IVA
- You will be restricted from obtaining further credit during the IVA
- An IVA will appear with credit reference agencies for six years
- If you do not keep up with the repayments, the arrangement could fail
- Your creditors have the right to reject your IVA proposal
- If you are a homeowner you could be asked to remortgage in your final year of the IVA
- If you come into a lump sum during the IVA, you could be asked to contribute some of the proceeds to the arrangement
Get Free Debt Advice
During your IVA
Once your IVA has been approved, your insolvency practitioner (IP) will manage the arrangement on your behalf. Your IP will contact your creditors to notify them of the IVA and request that they cease any direct contact or correspondence with you. The IP will also deal with any future correspondence. The insolvency practitioners will be your direct contact for any queries or changes that you may have during your IVA.
Your IP must be aware of any changes to your financial circumstances during your IVA. This ensures that your arrangement is reviewed to make sure your IVA ends with a successful completion.
During your IVA
Once your IVA has been approved, your insolvency practitioner (IP) will manage the arrangement on your behalf. Your IP will contact your creditors to notify them of the IVA and request that they cease any direct contact or correspondence with you. The IP will also deal with any future correspondence. The insolvency practitioners will be your direct contact for any queries or changes that you may have during your IVA.
Your IP must be aware of any changes to your financial circumstances during your IVA. This ensures that your arrangement is reviewed to make sure your IVA ends with a successful completion.
Your responsibilities on an IVA
Whilst on an IVA it is extremely important that you adhere to what you agreed within the arrangement:
Make your monthly payments on time – It is important to keep up to date with your new lower repayments. Failing to make payments could lead to your insolvency practitioner failing your IVA.
Notify your IP of any changes in circumstance – If you experience any significant changes, such as a change in job which alters your monthly income, you must inform your insolvency practitioner as soon as possible.
Is an IVA a good idea?
An IVA can be a great solution for debtors who can only afford to pay back a certain percentage of what they owe in the medium term.
It can also be a good idea for debtors who are struggling to keep up with multiple monthly repayments, as an IVA consolidates all debts into one manageable monthly payment.
However, the disadvantages of an IVA must be seriously considered and how they will affect your financial situation in the coming five years.
A lot of clients will feel the advantages outweigh the disadvantages, as it provides a clear roadmap to debt freedom whilst remaining affordable.
Is an IVA right for me?
If you have a debt problem and are unsure whether an IVA is the right solution for your financial circumstances, then we highly recommend you speak to one of our financial advisors.
As a trusted IVA provider, we understand how vulnerable and confusing this time can be. The PennyPlan team want to provide you with free advice that helps you make a more informed decision in finding a suitable solution.
We will discuss all your options with you, as well as any pros and cons associated with each solution. You should avoid any IVA company that does not discuss all your options, as understanding all debt solutions will ensure that you make the best decision for your circumstances.
Frequently asked questions about
individual voluntary arrangements (IVA)
If your creditors believe that they would get a better return by making you bankrupt, then they may refuse your IVA proposal.
However, our insolvency practitioner will negotiate with your creditors to try and reach an agreement that is acceptable to all parties.
An IVA will stay on your credit file for six years.
Once the IVA has been completed, you will be able to start rebuilding your credit score by making all future repayments on time and in full.
– Unable to obtain credit for the duration of the IVA
– A marker on your credit file for six years
– Your name will be published on an Insolvency Register
Each individual voluntary arrangement (IVA) is registered with the insolvency service.
Your Insolvency Practitioner will provide you with a case reference number, which can be used to locate your IVA on the individual insolvency register. This can be beneficial if you need to provide evidence of your IVA to creditors or financial institutions.
Unfortunately, you will not be able to transfer your current IVA to PennyPlan.
You will need to contact your current insolvency practitioner to discuss your options on how to ensure your arrangement comes to a successful conclusion.
An IVA covers all your unsecured debts, which includes any money you owe on items such as credit cards, personal loans or overdrafts.
It does not cover any secured debts, such as your mortgage or car loan.
Every persons financial circumstances are unique.
Compare IVA and a Debt Management plan with our in-depth comparison article. This will help you make a more informed decision to which debt solution is best for you.
At PennyPlan we provide plans to cater to the financial circumstances of every household.
Don’t worry if your IVA is rejected, we will provide debt advice on other solutions such as debt management plans, or even possibly re-proposing your IVA to creditors with improved terms.
If an IVA fails for whatever reason, it is possible to enter a second arrangement.
However, there must be clear evidence as to why you feel that the new IVA will be more successful than the previous.
There could have been numerous reasons as to why your IVA failed such as loss of job resulting in no income or a relationship split between a couple entered into a joint IVA.
Whatever the reason, we would need to explain why the IVA will have a better desired outcome not just for you, but for creditors also.
We cannot speak for every insolvency practitioner, however over 95% of our proposed IVAs are accepted by creditors.
This is because our team have many years of experience in liaising with creditors, understanding their voting habits and what they wish to achieve from individual voluntary arrangements.
Our debt advice team also have a very successful track record in negotiating on behalf of our clients to ensure that the terms of the IVA are acceptable to all parties.
An IVA advisor is the member of our team who will assist you in understanding the options available to you in resolving your debts.
They will help you assess your financial situation, and the documents required to proceed with the option you feel is best for your circumstances.
IVA Knowledge Hub
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Take the first steps to becoming Debt Free!
- One lower monthly payment
- Write off 75%* of unaffordable debt
- Freeze interest & charges
- Stop legal action including bailiffs
- Receive FREE well-being sessions
100% FREE ADVICE
Get information today on your available options
Take the first steps to becoming Debt Free!
- One lower monthly payment
- Write off 75%* of unaffordable debt
- Freeze interest & charges
- Stop legal action including bailiffs
- Receive FREE well-being sessions
