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DSSW is authorised by the Ministry of Justice to provide claims management advice.

DSSW is fully licensed by the Office of Fair Trading to provide debt management and credit broking advice.

Debt Solutions Southwest Ltd is a debt management business based in the South West of England, providing a full debt management and credit advisory service to individuals and businesses.

An IVA (Individual Voluntary Arrangement) is a legal contract between you, the debtor, and your unsecured creditors (the people, businesses, banks, etc., to whom you owe money) in which you agree to pay your creditors less than the total amount you owe them over a fixed period of time. Payments are paid in equal monthly amounts over the IVA period. Once the agreement has been honoured (that is, you have made all the payments) the remaining debt is written off, leaving you debt free.

Alternatively, you could offer your creditors a lump sum of money, which is less than your total debt, in full and final settlement of your debts.


An IVA does not include secured debt, such as mortgages, and some other debts such as student loans. It is often a way in which debtors, who cannot afford to pay all their debts, can avoid bankruptcy.


The IVA process starts with the debtor putting a reasonable proposal to creditors. (For what is a ’reasonable proposal’ see ‘Who qualifies for an IVA’ below.) This proposal has to be supported by a Nominee, who is a licensed Insolvency Practitioner. If your creditors accept the proposal, you then need to make all the payments promised. The IVA is complete when you have made all the agreed payments and the balance of the unpaid debts is now eliminated: in other words, the unpaid amounts are forgiven. Your Supervisor (who was also your Nominee) assists you through the IVA to its completion.


A key decision most debtors need to make is: “Should I put an IVA proposal to my creditors, or should I just go bankrupt?” We will help you make this vital decision.


An IVA brings you peace of mind. Your debt situation is clarified and you know exactly how much you have to pay and for how long. Also, you are not running away from your problems, but trying your best to pay what you can reasonably afford.


Once you have decided to propose an IVA and if you are under extreme pressure from creditors threatening, for example, to make you bankrupt, we can usually apply on your behalf for an ‘Interim Order’, which will protect you from creditor action until your IVA is in place.


An IVA is a discrete process. It is not advertised and is, therefore, not public knowledge. But you should note that your creditors will, of course, know about it and so will credit agencies, which will adversely affect your credit rating.


With an IVA, normally your job is not at risk. It allows you to focus on your life and your job without having the distractions of fighting off creditors and the uncertainty of where it will all end.


You should be able to keep your own home, which is highly unlikely in bankruptcy. However, you will probably be compelled to contribute as much of the ‘excess equity’ in your home as you can to your creditors - depending on your circumstances.


You might also be able to keep your motor vehicle and your personal belongings, such as TV, sound systems, etc., as long as they are not too lavish.


It could be difficult for you to stick to the agreement. You need to continue to make your payments for the whole agreed period, or you will be back where you started. Your payments will take nearly all your disposable income and put you under pressure to live within your means. You must have the discipline to spend less than you earn, which perhaps you didn’t do in the past!


Obtaining future credit could be difficult. Credit agencies will know you have entered into an IVA and this information will remain on your file for six years. You might have to put down a bigger deposit on any future mortgage loans and the interest rate you are charged could be higher.


There is, naturally, a cost of using advisers and Insolvency Practitioners to help you solve your debt problems. However, this might not cost you as much as you think and we will explain how this works before you decide what to do and commit yourself to anything.

 

There are no hard and fast rules for who qualifies for an IVA, but there are guidelines that will help you decide whether you are likely to be accepted for one.


The first things to understand is that 75% in value of your creditors who vote at the creditor’s meeting have to agree to your IVA proposal. The things that creditors consider when making their decision are:


- Do you, the debtor, have unsecured debts (that is, debts excluding any mortgages) of at least £15 000?


- Do you have a steady monthly income? This means you should either have a permanent job, or own a business from which you draw a reasonably steady income.


- Do you have ‘free', or ‘disposable’ income in excess of £200 per month? That is, will you have available enough money to pay a reasonable percentage to your creditors after you have paid your living expenses, but excluding your current interest payments?


- Are you proposing (and are you likely to achieve) total payments of at least 25% of your total unsecured debts (in other words, 25 pence for every pound you owe) over a period of no longer than five years?


Your IVA proposal must be supported by an Insolvency Practitioner through a positive ‘Nominees’ Report’ to creditors.


You must be prepared for the self-discipline involved in making regular payments over five years and be able to limit your expenditure to essential items during this period. In other words, you must be prepared to sacrifice quite a lot in the way you live to avoid bankruptcy and get back on a sound financial footing.


But a word of advice, if a lot of your debt is in personal loans, you might be better off checking whether your agreements might be unenforceable through the Free Do I Qualify? Debt Checker.