Complete our free debt advice tool to see if you qualify for an IVA
What does our free debt advice include?
What is not free?
If you sign up for a solution with Angel Advance to help you manage your debts moving forwards, fees will apply. The fee charged will depend on the solution chosen.
Angel Advance charges a monthly fee to administer debt management plans. Fees are included within the monthly payments to the plan. We may also receive referral fees when referring an IVA to our partners.
An Individual Voluntary Arrangement (IVA) is an agreement with your creditors to pay back what you can afford over 5 or 6 years, then they’ll write off anything that’s left. The amount of write off will vary depending on your situation and what you’re able to repay, but 50-60% could be realistic. An IVA is a form of insolvency and, as such, is legally binding on both you and your creditors once it’s agreed so you’ll need to be sure you understand the benefits and risks before deciding on an IVA.
Lots of firms advertise IVAs as a ‘government backed’ way to write off your debt. But beware – these firms may not be regulated by the FCA and, as such, may not warn you about the risks of insolvency and may not tell you about other solutions that could be available. There are also many misleading offers of 80% write off, or more but this level of write off is generally only realistic in a debt relief order or bankruptcy.
How do you apply for an IVA?
Key advantages of IVA’s
You will pay an amount that you can afford over a limited period, usually 5 years.
The remainder of your debts will be written off at the end of the term.
Your creditors can’t pursue you for the debts once the IVA is agreed, and they can’t apply interest and charges.
If you are a homeowner you will be able to remain in your home.
Key disadvantages of IVA’s
You can’t borrow more money during the course of the arrangement.
An IVA will be entered on the Insolvency Register and will show on your credit file for 6 years.
If you own a property and have equity, you may be asked to pay into your IVA for 6 years or to re-mortgage your house to pay some of the equity into your IVA.
If your situation changes for the better you will be expected to pay more to your creditors.
Frequently Asked Questions:
An individual voluntary arrangement is a formal process and typically takes around 4 to 8 weeks to complete. However, this will depend on each individual’s financial arrangements.
Once your IVA is in place, you will be expected to live to the budget that’s been agreed with you. You will always have enough flexibility in your budget to live comfortably, but may be expected to cut out some luxuries whilst your IVA is in place.
You won’t be forbidden from things like going on holiday, for example, but you’ll need to save up for luxuries like this out of the allowances in your budget, which will mean cutting back on other things.
You will also need to tell your IP about any changes to your situation. If you do lots of overtime, get a pay rise, or receive a lump-sum, like inheritance, you can’t just spend this on yourself, unfortunately. You’ll need to pay some of the extra money into your IVA so you should discuss with your IP straight away, before you spend any of it.
Setting up an IVA is a simple process; most of the work is carried out by us. We work with a partner firm call Unity Corp for the administration of your IVA. We prepare and gather everything needed for Unity Corp to process your IVA. The process entails a number of steps:
- You are referred to us, or can apply directly to us, and we request some basic information from you. If we’re able to help you we will then either set up a meeting with you or continue to communicate by phone or email, whichever suits you best. During this process we will confirm whether or not an IVA is the right option for you.
- We will then ask you to provide us with documentary evidence concerning your debts, monthly income and expenditure, any assets etc. We have to give a clear summary of your financial situation for the creditors.
- We will then compile your initial IVA application and pass your case over to our partner firm called Unity Corp. They will then draft your IVA proposal (your offer to the creditors). This is a legal document and includes your background information and the details of your offer, in addition to further information about the administration of the arrangement.
- You then approve and sign the IVA Proposal documents. The Insolvency Practitioner will consider them to ensure that your offer is fair to both you and your creditors. The Insolvency Practitioner will also prepare a report which is sent to your creditors with your proposal.
- At the same time the Insolvency Practitioner will arrange a meeting date for your creditors to vote on your proposal. You will not usually be expected to attend the meeting although you must be available.
An IVA is a legally binding agreement between you and your creditors for you to pay off some of your debt – whatever you can reasonably afford – and for your creditors to write off the rest.
Yes – and if you keep up your side of the agreement, anything left owing at the end of the IVA will be written off by your creditors.
The fees charged for preparing and supervising an IVA are included in the agreed monthly amount that you pay into your arrangement. You only pay any fees once your IVA is agreed.
Angel Advance is partnered with a firm called Unity Corp for the administration of IVA’s, you can find a full break down of the fees included in an IVA here.
An Insolvency Practitioner will take a thorough look at your financial situation (looking at bank statements, wage slips etc.) and work with you to put a case to your creditors for why you need an IVA (a ‘proposal’). Once you’ve both agreed on it, the proposal will be sent to your creditors to consider. An insolvency practitioner will only propose an IVA to your creditors if the think it will be successful.
Your creditors get to vote on whether they think the proposal is fair. They don’t all have to agree – 75% need to be in favour of the IVA for it to go ahead (this is based on debt balance).
The creditors can ask for changes to be made before they agree to it. This is quite common, and any changes they request will be discussed with you.
Once the IVA has been agreed, your creditors won’t be able to contact you about recovery of the debt, or take any further action against you.
If you don’t have enough income to make monthly payments, such as it you’ve just retired or had to give up work, you may still be able to do an IVA if you can make a one-off lump sum payment.
There are a number of ways this money can be raised. For example, a redundancy payment, pension release, a friend or relative gifts you some money, you could release the equity in your property, or surrender a life policy. The creditors are likely to accept writing off the majority of your debt if it is clear to them this is the only solution.
In a lump sum IVA, your IVA could be completed in as little as 3 months, compared with 5 years in a monthly payment IVA.
Most importantly, you’ll be able to stay in your home in an IVA.
If you have equity in your property, you may have to re-mortgage it and pay some of the equity into your IVA.
You won’t have to re-mortgage if it will make the payments unaffordable or if it will take your mortgage above 85% of the value of your property, but in these cases you may need to pay into your IVA for an extra year instead.
The solution that these adverts are trying to sell you is an IVA, but the truth of the matter is that you’re only likely to get 80-90% of your debt written off if you go bankrupt. IVAs are not exclusive to these firms, and you shouldn’t consider entering one until you’ve had advice from an FCA regulated firm which can tell you about all the solutions available to you.
An IVA is a serious commitment and the firms advertising on Google make a lot of money by selling your data onto another firm that will offer you an IVA. Unfortunately, there are high failure rates amongst some providers (failing an IVA means it will be terminated and you’ll often owe as much as you did at the start) because the IVAs being sold aren’t suitable. You can only know for sure that it is suitable if you’ve had FCA regulated debt advice and discussed all solutions.
You should be aware that the level of write off in a solution, if any, will be based on the solution you choose and your individual situation. In an IVA, for example, it would be extremely unlikely for 90% of debt to be written off; 50% would be far more realistic.
Before choosing a debt advisor, check that they are regulated by the financial conduct authority to offer ‘debt counselling’ and ‘debt adjusting’. This means that they can give debt advice and offer debt solutions. If they aren’t regulated, they will only tell you about what they can offer which may not be the best option for you and may cause you further problems further down the line.
An IVA can be agreed and in as little as 6 weeks. For you this will mean a suspension of all legal action, no further worrying phone calls or being chased by debt collection agencies.
If this seems like a long time, don’t worry, we can let your creditors know straight away that we’re working with you, and ask them to stop contacting you.
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