Individual Voluntary Agreements (IVAs) are an alternative to Bankruptcy that are often preferred
by insolvent home owners looking for a solution to help with repaying unsecured debt without having
to sell their homes. For anyone looking to apply for an IVA, then the first port of call is a licensed
Insolvency Practitioner (IP) who will be able to assess the debtor’s circumstances and advise if an IVA
is the most suitable option.
Once it has been established that an IVA is indeed the best way forward, the debtor is required to
complete an application form that will usually ask for all details of the individual's personal
finances, including outstanding debt or liabilities, any existing mortgages, any assets that may be
owned, details of income and reasonable monthly expenditures.
Evidence of financial situation
The applicant is also required to submit documentation as evidence to support their application.
In relation to current liabilities; statements or letters for existing and potential creditors will be
required along with child maintenance payments and should the applicant have car finance or a hire
purchase (HP) agreement, evidence will also be required. In many cases, car hire or HP agreements are not
taken into consideration in an IVA as the car could be simply repossessed if repayments cease. However,
if the car is required for a valid reason, and the payments are not excessive, then it may be included in
the IVA repayment calculations.
Evidence of Property and Assets
Where the applicant owns their own property and there is an outstanding mortgage, then a mortgage statement
will need to be supplied. While the mortgage repayments cannot be included in the IVA as a debt, it will be
taken into consideration when calculating how much the monthly IVA repayment will be. Furthermore, a property
valuation will need to be supplied.
Where an individual has assets, evidence is required and where there are physical assets, independent valuations
will need to be provided along with endowment policy surrender values, which can be obtained from the providing
insurance company. Proof of salary can be provided in the form of three recent payslips (running concurrently).
If payslips are not available, bank statements (which may be requested as a matter of course) should suffice.
Once the IP has received the application form and all supporting documentation, they will be able to calculate
an affordable monthly repayment and write a proposal that will be presented to the creditors who will then vote
on whether or not to agree to the terms.
It is important that all the information and evidence presented is honest and accurate to ensure the best chance of
an IVA being approved.