Individual Voluntary Arrangement (IVA)
What is an IVA?
An individual voluntary arrangement is a legally binding, formal agreement between yourself and your lender to pay off your debts over a period of time. As it is legally binding, it is approved by the court and you must stick to it, and so must your creditors.
An IVA must be set up by an insolvency practitioner, for example a lawyer or an accountant, who needs to be fully qualified. Said person will charge for the set up of the IVA; fees that can be high, corresponding with the amount you are paying back through the IVA – bear this is mind. The insolvency practitioner will be the person who deals with your creditor, throughout the term of the IVA.
Debt Management companies:
If you decide to go through a debt management company, the fees will most likely be higher so make sure you are well aware and have looked around for the best route for you before you go ahead with anything.
If you get an IVA:
When setting up an IVA, you will work out your repayment plan with your insolvency practitioner, which could be a lump sum, monthly payments or both combined. The plan must be realistic, and based upon what you can afford. The creditors must agree to the plan in order for it to go ahead. If they accept and the plan goes ahead, you will make the repayment/s to your insolvency practitioner who will keep some as their fees and then distribute the rest to the creditors. If your repayments will not cover your debts in full by the end of the IVA plan, you will not have to pay the remaining debt. However, if you come into some money e.g. an inheritance, the creditors may have the right to claim it (even if your IVA has finished).
Can you still get a mortgage with an IVA?
Like with a lot of adverse credit cases, having an IVA on your credit file will impact your chances of getting a mortgage. Whilst on an IVA, the possibility should be ruled out, however once it has completed do not think you don’t have a chance. Usually the IVA will leave your credit file upon completion (if longer than 6 years) or 6 years after it was agreed upon (if completed before 6 years). Once your file is clear, your chances of a lender accepting you for a mortgage will increase.
A helpful hint: once your IVA has completed, try to improve your credit file/score so it will be more appealing to possible lenders for your mortgage.
For more information about IVA’s, and for an idea of whether or not you would be eligible for a mortgage, contact us at View Finance today. We specialise in arranging mortgages for those with challenging scenarios, and those who have been turned away by many high street lenders. Call on 0333 320 8658 or email us at [email protected] and one of our friendly brokers will be more than happy to give you the best advice they can for your individual situation.