How do I apply for an IVA?
How do I apply
for an IVA?
Your IVA could be set up in just 1 month
If you don’t qualify for an IVA we can refer you to MoneyPlus Advice, an FCA authorised advice company. Free, impartial advice is also available at Money Helper, a debt counselling service set by Government.
What debts can be included in an IVA?
Previous rent & utility arrears
Buy now pay later debts
Creditors must accept your IVA after been given around 2 weeks to consider your IVA proposal.
As with a Debt Relief Order or Bankruptcy, an IVA is entered on the Insolvency Register which is accessible to the public.
If you are a homeowner, then you may be asked to release equity from your property to repay creditors. If you cannot do this, then your IVA could be extended by 12 months.
Should your IVA fail for reasons such as you fall into arrears by missing payments and do not remedy this, then your IVA could lead to Bankruptcy.
As with a Debt Relief Order or Bankruptcy, an IVA will affect your credit rating for 6 years.
Your payments are subject to review each year to ensure your IVA remains affordable. If it’s determined that you can afford to pay more, you will be expected to do so.
Before an IVA
|Payments before IVA||£750|
|Payments after IVA||£140|
|Total paid over 5 years||£8,400|
*payments are discussed with you at a level you can afford, subject to creditor acceptance.
Customer monthly repayments before and after taking an IVA.
Reduced by 80%
Self-help is where you seek to stick to a budget without the use of credit. You then contact creditors yourself and offer repayments to them based upon what you can afford, with the amounts being divided in proportion to the amount you owe them.
A consolidation loan is commonly known and can be an effective way of repaying your debts. You apply for the loan to cover all of your debts at a payment you can afford. This loan may be unsecured or secured against your property. Your interest rates, repayments and amount you can borrow will be dependent on your financial circumstances and your credit rating. This could also increase the length of time to repay your debts.
Debt Management Plan (DMP)
Debt Management is an informal debt solution, which means it’s not legally binding on any party involved. It must be administered by an organisation authorised by the Financial Conduct Authority. Some organisation do not charge a fee (these are usually paid for by creditors), whilst some charge a monthly fee for their services.
The DMP provider will assess your financial position and establish what you can afford to repay. They will then seek to negotiate with your creditors to gain their consent to repayments, and if possible, freeze interest and charges. Assuming this is accepted and your circumstances remain unchanged, your plan will last until your debt is repaid.
Debt Relief Order (DRO)
A DRO is a formal route into insolvency designed for people in severe financial difficulty that has a low income and low value of assets. In order to qualify for a DRO, you must fit the below criteria:
- Total debt level must be below £30,000
- Disposable income must be less than £75 per month
- You can’t be a homeowner
- Your assets (including any savings) must not be worth more than £2,000 in total
- You don’t own a vehicle that’s valued above £2,000, unless it’s been adapted for a disability
- You aren’t subject to any other type of Insolvency
- You haven’t been subject to a DRO in the last 6 years
- You’ve lived or worked in England, Wales and Northern Ireland in the last 3 years
From April 2022 to August 2022 37% of customers achieved a debt write off over 80%
Bankruptcy is a formal solution for those who are unable to repay the debts they owe and involves the write off of all qualifying debts. To apply for Bankruptcy you must pay a fee of £680 and complete an application online which will detail your income, expenditure, assets and debts. This will then be reviewed and approved should you meet the criteria. If you own your home, or any luxury items, you may be required to sell these to release funds to help pay your creditors.
A government Insolvency Practitioner called the Official Receiver will then manage the Bankruptcy.