Introduction to IVA UK

An IVA (Individual Voluntary Arrangement) is a British solution to common financial problems. It is an agreement between a debtor and a creditor – usually struck when the debtor is in a situation close to bankruptcy but would still prefer to pay his debts as opposed to filing for insolvency. It applies to unsecured debts (debts that are not guaranteed with any collateral). When the debtor applies for an IVA, all the interest rates stop applying and the creditor cannot apply any extra fees – making it so only the exact amount owed is paid for.

IVA UK Application

You may want to be entirely sure that an IVA is the best solution for you – for the simple reason that such a contract is legally binding. Make sure you discuss with a specialist to establish that out of all the possible insolvency solutions, this one will suit you best. In order to make sure the solution suits you, you must determine you are eligible for the process:


  • Your total amount of personal debts must be higher than £15,000.
  • The number of creditors you owe money to must be at least 3.
  • You should have a sufficient disposable income to provide a decent monthly payment to your creditors (estimated roughly around £170).
  • The debts that are taken into consideration are the unsecured ones (overdrafts, credit cards, catalogues, store cards, personal needs loans, outstanding balances, inland revenue, business loans of which you are responsible, council tax arrears or VAT payments).

Before applying for an IVA, you should discuss your situation with an insolvency practitioner. The good news is that there isn’t much of an extra charge – they usually charge their fees from your monthly payments and the amount of money you save by applying for the system will certainly be worth the fee. However, before choosing one practitioner, you may want to make sure that that is the case and check out all the costs included in the program.

The IVA UK Process

Once you have teamed up with an insolvency practitioner, he will basically act on your behalf in the process. You will have to go through the following steps:

  • Reviewing your financial situation and determining the possibility of being admitted into the process.
  • Drawing up a proposal for the creditors, detailing the debts and the debts' background. This is a step where you may need a solicitor to witness your signature on the final draft.
  • The creditors are presented with the proposal. Some of them will request modifications, in which case the insolvency practitioner will contact you and try to come up with the best solution that would be accepted by the creditors.
  • Occasionally, a creditors' meeting is held – if 75% of them accept your proposal, it is considered to be accepted by all.
  • Once the proposal is accepted, the insolvency practitioner will supervise your monthly contributions and make sure all the requirements are met.
  • You will make all your payments – if all are made in time you will manage to close your debts in an efficient manner, freeing you from any solvency issues.
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