An IVA (Individual Voluntary Arrangement) is an agreement between you and your creditors which lets you pay back a reduced amount of your debt in smaller, more affordable payments over a five year period. Here’s what happens in those five years.

Before your IVA is approved: What you need to know
Before an IVA begins, you must find an Insolvency Practitioner, who will help you draft an IVA proposal that your creditors will vote on during a creditors meeting. Providing the creditors with 75% of the debt agree to your proposal then it will be approved, regardless of what the other creditors with under 25% of the debt votes.

During IVA: Your responsibilities and rights
Once your IVA is approved, your creditors can no longer contact you and you are protected from further action, provided you stick by the terms on your IVA. Instead of paying multiple creditors and being constantly harassed, you can now focus on getting out of debt by making one IVA payment monthly for the duration of the IVA.

It’s understandable that circumstances change during an IVA. If at anytime during your IVA something changes to that could affect your payments, it’s vital you contact your Insolvency Practitioner so they can negotiate changes with your creditors. Your Insolvency Practitioner will also reassess your situation every year to make sure no amendments need to be made.

After IVA: Begin again without debt
Once your IVA is successfully completed, your IP will inform your creditors and your records will be updated. Because information on your credit record remains there for six years, the first year after an IVA could be difficult to borrow. However, after the first year, you are able to repair your credit rating.

Still interested? Get unbiased financial advice and read up on other debt solutions first to make sure it’s the best option for you.