An Individual Voluntary Agreement (IVA) is a legally binding agreement between the debtor and their creditors. In order to apply for an IVA, the debtor must owe over £15,000 to at least three creditors and they or their partner must have a source of income that originates from employment. What’s more, during the IVA, all interest charges will be frozen in order to break the circle of debt.
Once the creditors have agreed on the terms and conditions of the IVA, the debtor has 30 days to make the first payment in order to validate the agreement. Furthermore, they are then under the obligation to keep up with the payments for the agreement to be successful. The payments are usually made by standing order on a date that best suits the debtor (the payments are generally made a couple of days after the debtors so they can avoid overspending).
However, the debtor must notify the IVA Supervisor if they are unable to make a monthly payment, as it is likely the agreement might fail. Even though in most IVA’s there is a clause that states the agreement will fail following two mispayments on behalf of the debtor.
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