What is an...


IVA stands for Individual Voluntary Arrangement and is a type of insolvency. It is a formal, legally binding agreement with your creditors to pay back part or all of your debt over a set time period. They are often considered less severe than bankruptcies, but they still cause significant damage to your creditworthiness.

How can I check my IVA?

The status of your IVA will be recorded on your Credit Report, showing the start date, whether it’s active or discharged, which Credit Reference Agencies are reporting it, and more.

You can check your Multi Agency Credit Report with checkmyfile free for 30 days, then for just £14.99 per month. You’ll see everything being reported by the three main Credit Reference Agencies and you can cancel online whenever you like.

How does an IVA work?

An IVA can only be set up by a qualified person, such as a lawyer or an accountant. They will charge a fee for carrying out this process for you, which usually averages around £5,000. It is important to check upfront what the fee for your IVA will be.

You will then need to work out a repayment plan with the insolvency practitioner. This is given to your creditors and, if they agree, you then pay back a set amount each month over the timeframe agreed. Payments are made to an insolvency practitioner who then divides the money between your creditors.

Some of this money is kept each month to cover the practitioner’s fees. If you arrange your IVA through a debt management scheme you are likely to pay a significantly higher fee and a greater proportion of your repayments will be kept by them. As such it is crucial to ascertain exactly how much of your monthly payment will actually be used to repay your creditors.

Your IVA will be available to view on a public register, which is visible to prospective lenders and can seriously affect your chances of being accepted for credit.

Only unsecured debts included in the IVA will be written off at the end of the arrangement. Any secured debts that you hold will still be outstanding. If your IVA fails then your creditors may request that your practitioner files for your bankruptcy.

What can be included in an IVA?

There are no minimum or maximum sums set by law for an IVA to be arranged. Most debts can be included however the most common types are:

  • Credit cards
  • Personal loans
  • Store cards
  • Catalogues
  • Charge cards
  • Bank and building society loans and overdrafts

You can also include the following debts, though this is less common:

  • Council tax arrears
  • Tax debts
  • Electricity and gas debt

While some debts such as mortgages, secured loans or rent arrears can be included in an IVA your creditors are not likely to give permission for this to be included.

You cannot include certain debts in your IVA, such as:

  • Court ordered maintenance arrears
  • Child support arrears
  • Student loans
  • Magistrates’ court fine

What impact will an IVA have on your credit report?

IVAs will be reported for a minimum of six years from the date you entered into the arrangement, even once it has been discharged. If your IVA is not discharged at the end of this time then it will remain on your report until this is completed.

Any accounts included in your IVA will remain on your credit report, and any defaults, Arrangements to Pay and arrears, will continue to be reported as separate entries with their own removal dates. Most lenders will default your account as soon as you enter into your IVA however it can take significantly longer and it is entirely at the lender’s discretion as to when they do this.

An IVA will have a significant negative impact on your Credit Score and overall Creditworthiness while it is reported on your file and you are likely to have extreme difficulty obtaining further credit during this time. Most lenders will automatically decline your application if an insolvency is present on your Credit Report whether it has been discharged or not.

You must inform your Insolvency Practitioner if you wish to take out more than £500 of credit during the life of your agreement.

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