How to Apply for an Iva?

If you’re struggling to manage your debts, an Individual Voluntary Arrangement (IVA) might be an option worth considering. An IVA is a legally binding agreement between you and your creditors to pay off your debts over a period of time. It’s an alternative to bankruptcy and can be a useful way to take control of your finances. In this blog, we’ll guide you through the steps to apply for an IVA.

Step 1: Find a Licensed Insolvency Practitioner (IP)

To apply for an IVA, you’ll need to find a licensed Insolvency Practitioner (IP). An IP is a professional who is authorized to create and manage IVAs. You can find a list of licensed IPs on the Insolvency Service website. It’s important to note that you’ll need to pay for the services of an IP, so it’s essential to shop around and compare prices before making a decision.

Step 2: Assess Your Eligibility for an IVA

Before applying for an IVA, it’s important to assess whether you’re eligible. You must adhere to the requirements listed below in order to be eligible:

  • You must have debts of at least £6,000.
  • At least two creditors must be owed money by you.
  • You must have a regular income that can cover your essential living expenses and your IVA payments.
  • English, Welsh, or Northern Irish residents are required.

You can move on to the following stage if you satisfy these requirements.

Step 3: Provide Information to Your IP

Once you’ve chosen an IP, you’ll need to provide them with information about your financial situation. This includes details of your income, expenses, assets, and debts. You’ll also need to provide information about your creditors, such as their names and addresses, the amount you owe them, and the interest rates on your debts.

Your IP will use this information to create a proposal for your IVA. The proposal will outline how much you’ll pay each month, how long the IVA will last, and how your creditors will be paid. Your IP will then send the proposal to your creditors for approval.

Step 4: Your IP Will Negotiate with Your Creditors

Your IP will negotiate with your creditors to try to get them to agree to the proposal. If 75% of your creditors (by the value of debt) agree to the proposal, the IVA becomes legally binding on all of your creditors, including those who didn’t vote. This means that they’ll have to accept the terms of the IVA and can’t take any further legal action against you.

Apply for an Iva

Step 5: Start Making Your IVA Payments

Once your IVA is approved, you’ll need to start making your payments. You’ll make one monthly payment to your IP, who will distribute the money to your creditors. Your IP will also charge you a fee for their services, which will be taken from your monthly payment.

It’s important to make your payments on time, as failing to do so could result in your IVA being terminated. If your IVA is terminated, your creditors will be able to take legal action against you again, and you’ll be back to square one.

Step 6: Complete Your IVA

Once you’ve made all of your payments, your IVA will be complete. Your IP will issue a completion certificate, and your creditors will write off any remaining debts that were included in the IVA. It’s worth noting that IVAs typically last for five years, although they can be shorter or longer depending on your circumstances. During this time, you’ll need to adhere to the terms of the IVA and make your payments on time.

Benefits Of Applying for an IVA

There are several benefits to applying for an IVA, including the following:

  • Your debts will be manageable: An IVA allows you to pay off your debts over a period of time that is more manageable for you. This means that you’ll be able to pay off your debts without struggling to make ends meet.
  • Protection from legal action: Once your IVA is approved, your creditors can’t take any further legal action against you. This means that you’ll be protected from things like bailiffs, court action, and bankruptcy.
  • Reduce the stress of debt: Debt can be extremely stressful, and an IVA can help to reduce that stress. By providing you with a clear plan to pay off your debts, an IVA can give you peace of mind and help you to sleep better at night.
  • Reduce the interest on your debts: In some cases, your creditors may agree to freeze the interest on your debts once your IVA is approved. This means that you’ll be able to pay off your debts more quickly, as you won’t be accruing as much interest.
  • Avoid bankruptcy: Bankruptcy can be a daunting prospect, and an IVA can help you to avoid it. An IVA is a less extreme option and can allow you to pay off your debts in a way that doesn’t involve losing your assets or your job.

Conclusion

Applying for an IVA can be a useful way to take control of your debts and get your finances back on track. By following the steps outlined in this article, you’ll be able to apply for an IVA and start making your payments. Remember to choose a licensed IP, provide them with all of the necessary information, and make your payments on time. With a little bit of effort, you’ll be able to get your debts under control and start building a brighter financial future.

Leave a Comment