Individual Voluntary Agreement (IVA) FAQ

Please use this page as a resource when deciding if an IVA is right for you. In this section are a selection of the most common questions that arise when an individual begins considering an IVA to solve their debt worries.

You may contact Morrison Clarke on 08000 911 420 if you have any further questions or wish to discuss any of these points in greater depth.

What is an IVA?
Who is an IVA suitable for?
How long does an IVA take to setup?
Does an IVA result in a loss of assets?
Does an IVA affect my credit rating?
Can I stay in business?
Will it affect the position of a professional person?
Does an IVA become public knowledge?
How long does an IVA last?
What type of creditors can be included in an IVA?
Does bankruptcy affect obtaining an IVA?
What happens if I don't keep up repayments on an IVA?
What happens when the IVA has finished?
Does having a CCJ affect entering an IVA?
Can I apply for an IVA if I am not a homeowner?
Does an IVA cover all of my debts?
Can creditors refuse an IVA?
Can an individual creditor refuse to accept an IVA?
Does an IVA mean creditors will stop debt recovery action?
What happens if my financial circumstances change?
Can an IVA be cancelled?
What happens if IVA repayments stop?
How does an IVA affect interest and other charges?
While the IVA is approved can a creditor take debt recovery action?
What happens if the IVA fails approval?

What is an IVA?
An IVA stands for Individual Voluntary Agreement and is bound by law governed by the insolvancy act. The IVA proposal is a method of showing creditors they stand to benefit more financially verses the client going into bankruptcy. The creditors meet once the process of an IVA has been initiated to vote on making the proposal legally binding. 75% of the creditors must approve the repayments and agree to stop any further interest and charges for the IVA to be accepted.

Who is an IVA suitable for?
It is possible to take out an IVA if you have debts over £15,000 to 3 or more creditors.

How long does an IVA take to setup?
The process of setting up an IVA takes between 6 and 8 weeks.

Does an IVA result in a loss of assets?
You get to keep your house but any equity will be taken into account usually at the end of the arrangement. If the asset is divided between joint owners then the person not involved in the IVA will not have their share of the equity included in any offer to creditors.

Does an IVA affect my credit rating?
Your credit rating will be restored after the IVA is completed but during the period you will have to give up all credit cards, store cards and will be unable to take out any unsecured loan finance.

Can I stay in business?
Bankruptcy means all business activities must cease but with an IVA there is no limit on your what you can do.

Will it affect the position of a professional person?
Employment is unaffected and anyone is elibible to enter into an IVA with their creditors.

Does an IVA become public knowledge?
Unlike bankruptcy an IVA is a confidential agreement between you and your creditors. The information cannot be published.

How long does an IVA last?
An IVA lasts typically for 5 years, however this can very depending on the individual.

Does bankruptcy affect obtaining an IVA?
Bankruptcy can be annulled when an IVA is applied for.

What happens if I don't keep up repayments on an IVA?
Since an IVA is legally binding the result of defaulting on repayments can bring about bankruptcy.

What happens when the IVA has finished?
Once the IVA has been completed the Insolvancy Practitioner will provide a document called a Statement of Completition. This will happen within the final 3 months of the 5 years and a copy will be sent to the Insolvancy Service.

Does having a CCJ affect entering an IVA?
It is perfectly okay to enter into an IVA regardless of CCJs against your name.

Can I apply for an IVA if I am not a homeowner?
You dont have to be a homeowner. It is perfectly acceptable to apply if you are a tenant or living with your parents.

Does an IVA cover all of my debts?
An IVA will not cover debts secured against your assets or home, but will cover all unsecured debt and account arrears.

Can creditors refuse an IVA?
The decision to accept or reject an IVA is made by your creditors at a creditors meeting. You need to have 75% of the value of those that vote accept the offer being made for the IVA to go ahead. If this figure is not achieved then the IVA will fail.

Can an individual creditor refuse to accept an IVA?
For an IVA to be accepted 75% of the creditors must agree to the terms laid out in the proposal. If a creditor refusing to accept the IVA does not constitute over 25% of the total value then they must accept the terms of the agreement and are legally bound to do so.

Does an IVA mean creditors will stop debt recovery action?
All unsecured creditors covered by the IVA must freeze all interest and court proceedings so no further debt recovery action can be initiated once the process is in place.

What happens if my financial circumstances change?
If you become unable to afford the repayments due to a change of circumstances, or gain more available revenue, then your IVA supervisor can request variations.

Can an IVA be cancelled?
As it is a legally binding agreement, once the IVA has been started it cannot be halted.

What happens if IVA repayments stop?
Failure to keep to the repayments will result in the supervisor for your IVA filing you for bankruptcy.

How does an IVA affect interest and other charges?
Interest and other charges will be included in the IVA if it is approved.

While the IVA is approved can a creditor take debt recovery action?
For creditors to suspend further action till the IVA is underway you must approach the courts for an Interim Order. This will prevent any of the creditors taking debt recovery action till the outcome of the IVA application has been decided.

What happens if the IVA fails approval?
The alternatives to an IVA are bankruptcy or informal agreements with your seperate creditors to repay the debts.