I can’t keep up with my IVA – what can I do?
Posted on Thursday, December 17th, 2009
If you are finding it difficult to service your unsecured debts, and don’t think you’ll be able to repay them in the near future, then an Individual Voluntary Arrangement (IVA) might be the most appropriate way out of debt for you.
- Before an IVA can go ahead, voting creditors accounting for 75% or more of your debt must agree to the terms you and your IP (Insolvency Practitioner) set out in your ‘IVA proposal’.
- IVAs are formal, legally binding agreements between you and your unsecured creditors. In most cases, you will be required to make regular reduced monthly payments (that reflect what you can actually afford) for 5 years. When the IVA comes to a successful conclusion, any remaining unsecured debt you have will be written off.
- An IVA would not be suitable for you if you cannot commit to making the repayments. This may be the case if, for example, you have an unstable income.
However, anyone’s circumstances can change, and you can’t predict exactly what the future holds – for example, your income may drop and/or your expenses may increase, which could cause problems when trying to afford your repayments.
- If this happens, and it does affect your ability to meet the agreed repayments, then you can ask your IP about an IVA variation.
- Your IP is responsible for arranging your IVA. They are also there to support you during the agreement. If your circumstances do change, and you can no longer afford to make your IVA payments, your IP may be able to arrange an IVA variation. An IVA variation involves changing the agreement terms to reflect the change in your circumstances, and to (hopefully) ensure the IVA won’t fail – for example, your creditors may accept lower monthly repayments, for a longer timeframe.
- The way your IVA variation will be arranged is similar to the way your original IVA was organised. Your IP will help you draw up a new proposal, which will be given to your creditors. Your IVA variation has to be accepted by 75% of your creditors – as with your original proposal.
- If your creditors reject the new proposal, you could put forward an alternative one, consider an alternative debt solution or let the IVA fail and petition for bankruptcy. Although bankruptcy does have its drawbacks, for some people it is the most appropriate route out of debt.
Tagged as debt, debt help, debt management, Individual Voluntary Arrangement, iva, UK+ Categorized as debt