Introduction

Obtaining an IVA is a complex process and requires a close examination of your entire financial situation. An IVA is usually thought of as a way of avoiding bankruptcy but it has its pros and cons like every debt solution. More generally, an IVA is a legally binding agreement between you and your creditor to pay your debts over some time. The court approves it, and your creditors have to follow it. However, it must not be perceived as an easy way to avoid bankruptcy and lower your payments to creditors. They must be arranged by a qualified insolvency practitioner who will handle your creditors throughout the entire life of the IVA.

Your insolvency practitioner will create a repayment plan. A typical repayment timescale is five years. You pay the insolvency practitioner the agreed sum, and they then distribute this to your creditors. The creditors write off any outstanding sums at the end of the period (provided no payments are missed). You will be expected to live on a budget approved by your creditors for the duration of the IVA. Changes in circumstances must also be reported. In addition, the IVA will be included in your credit history, which could affect future borrowings.

 

Typically obtaining an IVA takes four stages.

• Applying to the court for an interim order (stops creditors chasing you);
• Financial examination;
• Drawing of a proposal, here the practitioner will argue that an IVA is a more suitable option than bankruptcy with your creditors; and
• Creditor’s vote; if the majority agree then, the IVA is awarded.

 

Costs

IVAs are expensive because they have to be set up by a qualified insolvency practitioner, costs vary hugely but can typically be several thousands of pounds, these are normally paid in instalments as part of your IVA payments.

 

Assets

Assets that you own outright will be sold to help pay your creditors (unless they have minimal value or you have a valid reason not to sell them), your insolvency practitioner will go through these with you.

 

Windfalls

You must inform your insolvency practitioner if you come into any money during the IVA period. Typically, the first £500 is ignored; the rest goes to your creditors.

 

Warning

There are firms on the internet that offer such terms as “write off 80% of your bills” etc. These pay to be at the top of search engine results and exist to make a profit (from you, obviously), we would suggest taking such claims with extreme suspicion and steer clear of such companies as they would charge a fee for simply referring you to a practitioner. To annoy them and save you money here is the direct link - https://www.gov.uk/find-an-insolvency-practitioner

 

How we can help

Lestons are not registered as financial advisors and can therefore not give specific advice, we can however provide you with access to our recommended professional financial advisor who can give you great advice. Please note we make no commission from these referrals but do need clients to open a case so that we can prepare a financial brief for them. Living under the restrictions levied on individuals can have significant mental health effects, to address this any client who uses Lestons to arrange their IVA gets 100 hours of free mental health support from our in-house psychological team. To open a case simply click the link at the top of the page, our staff are ready and eager to assist you in any way possible.

 

To gain our assistance you need to open a case, this is done by simply clicking on the link at the top of the page, you will then need to deposit a sum equal to one hour’s usage, upon receipt of these funds you will be assigned your personal caseworker who will telephone you to discuss the matter and make suggestions on how to proceed. Please note your caseworker can only give generic advice, their role is to prepare your details for handling by our appointed financial advisor and to act as your point of contact, they will also issue you with your Password and PIN, these will be needed to log onto your client dashboard. From your dashboard you will be able to manage and view every aspect of your case, upload documents, images, files etc.