How to Apply for an IVA

Applying for an Individual Voluntary Arrangement involves several stages, each designed to ensure the arrangement works for both you and your creditors. Here's what to expect:

1. Initial Assessment

Contact a licensed insolvency practitioner (IP) for a free, no-obligation consultation. They'll review your income, expenses, debts, and assets to determine if an IVA is suitable. This typically takes 30-45 minutes and can be done by phone, video call, or face-to-face.

Your IP will calculate how much you can afford to pay each month after essential living costs. They'll need details of all your creditors, outstanding balances, and any secured debts like mortgages.

2. Gathering Evidence

If an IVA looks viable, you'll need to provide documentation to support your proposal:

• Last 3 months of payslips or proof of benefits
• 3 months of bank statements
• Proof of address (utility bill or council tax statement)
• List of all creditors with account numbers and balances
• Details of any assets (property, vehicles, savings)
• Self-assessment tax returns (if self-employed)

Your IP will verify this information and may request additional documents depending on your circumstances.

3. Proposal Drafting

Your IP prepares a formal IVA proposal document containing:

• Full list of your unsecured debts
• Your monthly income and expenditure breakdown
• Proposed monthly payment amount
• IVA duration (typically 5-6 years)
• Terms for windfalls, equity release, and income increases
• Fees the IP will charge (usually deducted from payments)

You'll review and sign this proposal before it goes to creditors. Make sure you understand all terms and ask questions about anything unclear.

4. Creditor Notification and Voting

Your IP sends the proposal to all listed creditors along with a voting form. Creditors have 14 days to:

• Vote to accept or reject the proposal
• Request modifications (like higher payments)
• Choose not to vote (which counts as acceptance)

The IVA is approved if creditors holding at least 75% of your total debt value vote in favor. Creditors who vote against must comply if the 75% threshold is met.

5. IVA Start Date

If approved, your IVA typically begins the day after the voting deadline. From this point:

• Interest and charges on included debts are frozen
• Creditors cannot contact you or take legal action
• You make your first monthly payment to the IP
• The IVA is registered on the public Insolvency Register

Setting Up an IVA Online

Many IPs offer the entire application process online or by phone, making it convenient if you can't attend in-person meetings. You'll upload documents through a secure portal and sign agreements electronically.

However, the legal requirements remain the same whether applying online or face-to-face. An IP must still assess your case, prepare the proposal, and manage creditor voting.

Common Reasons IVAs Are Rejected

• Proposed payments too low compared to your disposable income
• Unstable income making payments unreliable
• High proportion of debt to one creditor who votes against
• Better alternatives available (like a DMP or DRO)
• Incorrect or incomplete financial information provided

A reputable IP will give you an honest assessment of approval chances before submitting your proposal. If rejection seems likely, they'll recommend alternative debt solutions.

Can I Apply for an IVA Myself Without a Company?

You cannot legally set up an IVA without using a licensed insolvency practitioner. However, you can approach an IP directly rather than going through a debt management company or referral service.

Going direct to an IP may reduce fees since there's no middleman taking a commission. You can find IPs through the R3 (Association of Business Recovery Professionals) or Insolvency Practitioners Association directories.

What Happens After You Apply?

While waiting for creditor votes (usually 10-14 days), you should continue making minimum payments on debts if possible. If your IVA is approved, refund any payments made after the voting deadline.

If creditors request modifications (like higher monthly payments or shorter term), your IP will discuss these with you. You can accept the modifications or withdraw the application if terms become unaffordable.

Once approved, you'll receive a written confirmation and your first payment date. Your IP becomes the main point of contact for your debts going forward.