Individual Voluntary Arrangements. IVA Companies. StepChange (2024)

FAQs

What is an IVA in StepChange? ›

An individual voluntary arrangement (IVA) is a formal agreement between you and the people you owe. It helps you repay your debts at an affordable amount. IVAs are arranged by StepChange Voluntary Arrangements, part of StepChange Debt Charity.

An Individual Voluntary Arrangement (IVA) freezes your debts and allows you to pay them back over a set period. Any money you still owe after this period is then written off. You can apply for an IVA if you can afford to pay something towards your debts but not necessarily the full amount your creditors want.

An Individual Voluntary Arrangement ( IVA ) is an agreement with your creditors to pay all or part of your debts. You agree to make regular payments to an insolvency practitioner, who will divide this money between your creditors. An IVA can give you more control of your assets than bankruptcy.

Clearing your debt with an IVA. An individual voluntary arrangement (IVA) can negatively affect your personal and professional life, and make a dent in your credit score. But, if managed well, an IVA can also help you get your finances back on track.

Anyone over the age of 18-years-old who is in debt and has a monthly disposable income could be able to get an IVA. Disposable income is money left over after your essential monthly expenditure such as mortgage/rent, council tax and utilities has been paid.

Having an IVA might affect any future income or assets that you get. For example, if you move house during an IVA, any money you make as profit from the sale of your property might have to be paid into the IVA. If your income goes up while you have an IVA, you have to declare it to your insolvency practitioner.

How long does an IVA last? An IVA usually lasts five years, but it can extend for another 12 months if: You have not paid what you agreed in the six years. The insolvency practitioner (IP) and the people you owe agree to it.

After what might have felt a long time coming, you will finally be debt free. Once your IVA has been completed and your IP has finalised the last payment, you will be free to enjoy life knowing you have no more debt to worry about.

Most IVAs will give you up to 1 month to respond to a notice of breach. If you respond on time and agree how you'll pay any missed payments, your insolvency practitioner won't take any more action against you. If you don't contact your insolvency practitioner they might end your IVA. They might also make you bankrupt.

There is a risk that the IVA is agreed on the basis of monthly payments that you cannot afford over a long time. You must be very careful that the payments are set at a realistic amount in the first place.

Is a voluntary arrangement right for me? ›

An IVA can go wrong at any time. Your creditors may reject your proposal at the first meeting, and you will be back to square one. You should only consider an IVA if you think major creditors are likely to support your proposal.

How do I pay off an IVA early? You will need to offer your creditors a lump sum as a one off payment, and agree that no more monthly payments are required. They will then accept this as settling the debt and the IVA will be closed.

An IVA has a guaranteed end-point – a DMP hasn't

But some IVAs go on for much longer than planned. Some last for more than seven years because people needed payment breaks or had to pay in extra money from overtime or bonuses. A DMP goes on until you stop it or you have cleared all of the debts.

Your IVA payment will be equal to the amount of money left over, once all of your essential living costs have been deducted from your income. Put simply, if you earn £2,000 and your total living costs are £1,850 then your IVA payment should be £150.

Individual Voluntary Arrangement (IVA) Debt Management Plan (DMP) IVAs normally last for five years. DMPs will continue until the debt is paid back in full including repayment of interest and charges. A large proportion of debt may be written off at the end of the IVA.

Once your IVA has successfully completed any outstanding balances will be written-off an you will be officially debt free. On receipt of your certificate of completion you should send a copy to each of the 3 major credit reference agencies, namely 'Experian', 'Equifax' and 'TransUnion'.