Typical Case Fee £3K - £5K
Typical Case
An employed person with with a disposal income of £300 per month who has personal debt i.e. 5/10 credit cards.
Payment minimum of 25p in the pound paid over 5 years.
An IVA (Individual Voluntary Agreement) could help you become debt free within 5 years as well as giving you legal protection from further interest and charges being added to your debts. Financial Saviour have extensive experience providing IVAs for people with debt problems.
Who can enter into an IVA?
An IVA is available to all Individuals, Sole Traders and Partners (the Debtor) who are experiencing difficulty in meeting contractual payments to their unsecured creditors. This is providing they have a stable income and a surplus each month after paying for basic living costs. Typically unsecured debts should total at least £20,000 and be owed to more than one creditor.
Will my IVA be accepted?
Whether or not an IVA is accepted depends totally on how the creditors vote. An IVA will be accepted provided more than 75% of the creditors by value, vote in favour. If this is achieved, then the IVA is accepted and all unsecured creditors will be bound by the IVA.
An IVA must offer a higher return than would otherwise be expected were the debtor to go bankrupt. Your creditors will judge each application for an IVA on its own merits, deciding factors can be: value of assets, level of debt, monthly repayment offer, reason for debt and the age of the debt.
Standard Protocol for income only IVAs
Creditors will expect a high level of commitment from the debtor during the term of an IVA. Socialising, holidays, gifts, beauty treatments, gym membership and any savings are classed as luxury expenses and are typically not accepted by creditors as essential areas of expenditure.
How long will my IVA last?
Typically monthly payments are made over a period of 5 years. There are no minimum or maximum term, this is by negotiation. Occasionally you may be in a position to make a full and final offer to your creditors, this type of IVA would typically be for a period of 12 months.
An IVA will continue as long as regular payments are made. Defaulting on payments could result in the failure of the IVA at which point the debtor could either be back at the mercy of the creditors or be made bankrupt.
Which of my debts can I include in an IVA?
The following debts can be included in an IVA:
- Bank accounts
- Finance company loans
- Credit/Store cards
- Outstanding VAT
- Outstanding Inland Revenue debt
- Loans from family or friends
Which of my debts cannot be include in an IVA?
The following debts cannot be included in an IVA:
- Mortgages and secured loans on your property
- Hire Purchase Agreements (except shortfalls)
- Magistrates Court Fines, speeding/parking tickets etc
- Debts incurred through fraudulent activity
- Maintainance / CSA Arrears
- Arrears on a rental property
How Financial Saviour propose your IVA
You will require the services of Financial Saviour’s Partnership's licensed Insolvency Practitioners to propose your IVA.
They will advise you and assist you with the entire IVA process. Financial Saviour’s Partnership's Insolvency Practitioners have been assisting debtors through the IVA process for many years.
Stages of your IVA
The following highlights the stages of entering into an IVA with Financial Saviour.
Stage 1
Financial Saviour will assess your financial situation and, if feasible, put you forward for an IVA. One of Financial Saviour’s licensed Insolvency Practitioners will need to "nominate" you for the IVA (this is simply part of the process and means they feel an IVA is an appropriate solution).
Stage 2
Your "proposals” are then drawn up based on the information you provide. They are your
proposals and they allow you to put forward the best offer of repayment you can afford. The offer could be a lump sum amount or regular contributions for 5 years. Our staff will assist you every step of the way.
Stage 3
A copy of your proposals will be sent to each of your creditors, who are invited to vote to either accept or reject the proposals. If a majority of your creditors (at least 75% of the value of the total is in the form of an acceptance) vote in favour, then the IVA is approved and will be legally binding for all creditors (even those who may have refrained from voting or those who rejected the
proposal).
Stage 4
Once your IVA is approved, you simply begin the agreed payments or pay the lump sum into the arrangement and all calls and letters from your creditors must cease.
Stage 5
Once the agreed payments have been completed the remainder of the debt will be cleared,
leaving you debt free.
The Advantages of an IVA
- It guarantees you won’t lose your home.
- It makes it possible to be debt free within 5 years.
- All interest and charges on your unsecured debts will be frozen.
The Advantages of an IVA (continued)
- Providing you keep to the terms of your arrangement, you will be protected from any further court action by your creditors. They will also be prohibited from sending letters telephoning you.
- Once the individual voluntary arrangement is successfully completed your debts are effectively written off, providing you with a fresh start.
- For anyone who does not wish to consider bankruptcy or cannot go bankrupt because of their job this can be an excellent option.
The Advantages of an IVA (continued)
- All unsecured creditors will be bound by the IVA.
- Your contributions are based on your ability to pay.
- Individual Voluntary Arrangements are not published in local newspapers, unlike bankruptcy.
- It will not affect professions such as the Police Force and Armed Forces, neither will it affect your ability to hold public office or act as a company director.
The Disadvantages of an IVA
- You will be required to stick to a budget for the term of the arrangement
- All assets and liabilities must be declared, if you own assets of excessive value, the creditors can ask that they be released for the benefit of the creditors.
- You may be required to make additional payments if you wish to exclude your property from the arrangement.
- In some cases it may be necessary to release some of the equity from your property in the 4th year of the arrangement.
- Any windfalls, inheritance or bonuses must be declared to the Supervisor of the arrangement.
- All Individual Voluntary Arrangements are recorded on a public register and are likely to appear on your credit file.
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