IVA

Circumstances can change - If you've lost control of your finances an IVA could get you back on track. An Individual Voluntary Arrangement (IVA) is a legally binding agreement with your creditors to pay back a percentage of your debts over a set period of time.

A licensed Insolvency Practitioner is appointed to assess your circumstances and formalise the agreement which can sometimes require the disposal of some personal assets. An IVA typically lasts 5 years, though can be 6 years in some cases. Anyone entering into an IVA must be sure they can see it through to completion as if an IVA fails, the IP may file for the customer's bankruptcy.

After giving the customer an allowance for their necessary living expenses, the remainder of their income is paid to the IP, who will deduct their fees from this and pay the remainder to the client's creditors. Home owners may have to remortgage their property in the fourth year to release equity to their creditors. Entering into an IVA is not guaranteed, as creditors holding at least 75% of your debt by value must agree to or not vote against the IVA. Once the IVA is agreed, creditors cannot add fees or charges to the debts and will not chase the customer for any further payments. Additionally, once the IVA is complete, any remaining debt is written off.

Gemstone can provide access to market leading Insolvency Practitioners to guide you through the process of entering into an IVA. The costs differ significantly and will depend upon your circumstances. All of the fees are met by the agreed monthly payments you make into your IVA, which will be at a level you can reasonably afford. The initial costs are usually equal to 5 months' payments and the ongoing costs tend to be around £1,200 per annum, but you will not need to pay these in addition to your normal monthly payments.