What is an IVA
It is a formal, legal and binding arrangement with your creditors in which they recognise that you are having great difficulty in making the contractual payments to your debts. Your creditors agree, through the IVA, to accept a payment you can afford and write off a portion of your debts, leaving you debt free, usually after a period of sixty months.
An application for an IVA must be approved by your creditors, and they will be called upon to vote to accept or reject the application. If creditors owed 75% of the total value of the debt vote to accept, the IVA will be approved, and all the creditors will be bound by it.
An IVA is supervised by a licensed Insolvency Practitioner, who is regulated under insolvency regulation, and will protect you from recovery action by your creditors.
All interest and charges are frozen.
An IVA could be the best debt solution for you if
- You have unsecured debts of £15,000 or more
- You have 3 or more creditors
- You are struggling to make your contractual payments to the debts
- You have a monthly disposable (spare after all essential living costs) of £200.00 or more
A note of the IVA will stay on your credit reference file for 6 years from the date of the arrangement.
Are all Insolvency Practitioners the same regarding an IVA?
All Insolvency Practitioners have to be registered with a professional regulatory body, such as the Insolvency Practitioners Association (IPA) who are responsible for ensuring that appropriate professional standards are maintained in the way the IPs conduct their business.
That said, not all Insolvency Practitioners are the same! Some take a much harder line than others when considering IVAs, and are less practical in dealing with specific issues for individuals. Like many things in life, different people interpret the same criteria in different ways!
Whilst nowadays there are pretty much standard arrangements for fees, these may differ from one Insolvency Practitioner to another, and it pays to check even if these are effectively agreed by the creditors as part of their consideration of the IVA Proposal.
Be wary of any Insolvency Practitioner who wants to charge ‘up front’ fees – i.e. fees for preparing the paperwork ahead of the IVA Proposal. This is not appropriate and you are not required to pay these as part of the process established under the law or the current ‘IVA Protocol’ between creditors and the Insolvency profession.
At National Money we do not require, and do not approve of, up front fees. Any fees to cover work by our experts comes from the contributions made by the debtor into the IVA on a monthly basis – if the monthly contribution is set at £300 per month, that is the only sum required of the debtor into the IVA.
Similarly, make sure you are not asked for a payment to cover postages, settlement of court application costs and stationery costs allegedly incurred in circulating papers to creditors. These are all included as part of the costs included within the IVA, and you should decline such requests. Court applications (Interim Court Orders) are nowadays very rare and seldom required and you should not encounter this sort of cost.
Further you should not be asked for sums to cover the costs of advice; National Money do not charge any fees to you for any advice given.
