The Ultimate Guide to Individual Voluntary Arrangements (IVAs)

Introduction

Individual Voluntary Arrangements (IVAs) are a popular debt solution in the UK for those struggling to meet their financial obligations. This comprehensive guide will help you understand the basics of IVAs, their pros and cons, and the process involved in setting one up. With SortMyCash and our partner Debt Guardians, you can navigate the complex world of debt solutions with confidence.

What is an IVA?

An IVA is a legally binding agreement between you and your creditors to repay a portion of your debts over a set period, usually five to six years. At the end of the IVA, any remaining debt is written off. IVAs are designed for individuals with unsecured debts who can make regular payments towards their debts but cannot afford the full amount.

Pros of IVAs

  1. Single monthly payment: An IVA consolidates your unsecured debts into one manageable monthly payment, making it easier to budget and keep track of your finances.
  2. Interest and charges frozen: Once an IVA is in place, interest and charges on your debts are frozen, preventing them from increasing.
  3. Legal protection: An IVA offers legal protection from your creditors, stopping them from taking further action against you.
  4. Debt write-off: At the end of the IVA term, any remaining debt is written off, allowing you to start fresh.

Cons of IVAs

  1. Impact on credit rating: An IVA will negatively affect your credit rating for six years from the start date, making it more difficult to obtain credit during this time.
  2. Restrictions on spending: You will need to adhere to a strict budget during the IVA term, with limited discretionary spending.
  3. Equity release: If you’re a homeowner, you may be required to release equity from your property to contribute towards your IVA.
  4. Failure risk: If you fail to maintain the agreed-upon payments, your IVA may fail, and you could be at risk of bankruptcy.

Setting Up an IVA with SortMyCash and Debt Guardians

  1. Initial consultation: Contact SortMyCash and our partner Debt Guardians for a free, confidential assessment of your financial situation. We’ll help determine if an IVA is the best solution for you.
  2. Proposal preparation: If an IVA is suitable, Debt Guardians will help you create a proposal outlining your repayment plan and submit it to your creditors.
  3. Creditor approval: Your creditors will review the proposal and vote on whether to accept it. If at least 75% of your debt value is represented by creditors who agree, the IVA is approved.
  4. IVA management: Once approved, a licensed insolvency practitioner (IP) will supervise your IVA, ensuring you make the agreed payments and distributing them among your creditors.
  5. Completion: After successfully making all payments, your IVA will be completed, and any remaining debt will be written off.

Conclusion

An IVA can be a lifeline for those struggling with unmanageable debt. By understanding the pros and cons and seeking expert guidance from SortMyCash and Debt Guardians, you can make an informed decision about whether an IVA is right for you.

Are you ready to take control of your financial future? Let SortMyCash and Debt Guardians help you navigate the world of debt solutions. Click here to get started on your journey to debt freedom today.