Putting together an Individual Voluntary Agreement (IVA) generally takes around six weeks from your first consultation to your initial payment. However, there are several factors that could either quicken or slow down this process.
Stay tuned to uncover what really impacts “how long does an IVA take to set up.
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Many individuals find themselves in debt. It’s most likely due to the result of unforeseen circumstances that disrupt their ability to meet financial commitments. Events like job loss or unexpected expenses, such as medical bills, can contribute to this situation.
Many of us manage debt informally by practising prudent budgeting and making sacrifices until the debt is cleared. But others may require a more structured approach.
In the sections below, you will discover valuable information regarding debt recovery through the establishment of a formal arrangement known as an Individual Voluntary Arrangement (IVA).
What Is An IVA? – The Basic Points to Understanding How Long Does an IVA Take to Set Up
Before we get into the question, “How long does an IVA take to set up?” It’s important to first understand what an IVA, or Individual Voluntary Agreement, is. Simply put, it’s a financial agreement between you and the people you owe money to, commonly known as your original creditors.
- Debt Consolidation: An IVA lets you bunch all your various debts into one manageable monthly payment.
- Structured Repayment: You’re not flying solo here. A third-party organisation mainly led by an Insolvency Practitioner (IP) takes charge of managing your repayments, making sure everything runs smoothly.
- Legal Protection: Creditors can’t harass you for payments or stack on additional interest once you’ve got an IVA. That’s right.
This is your financial shield, offering you some breathing room.
So you’re drowning in debt, and you need to get your head above water. What makes an IVA a viable option?
- Fixed Duration: An IVA typically lasts five to six years.
- Affordable Payments: Unlike random, sky-high bills flooding your mailbox, an IVA tailors your repayments to what you can realistically afford.
- Asset Protection: Own a home? Have a car? Good news! An IVA usually safeguards your key assets from being seized by creditors.
You might think, “Well, an IVA sounds good, but how does it stack up against other debt solutions?”
- Bankruptcy: This option wipes your slate clean, but at a steep cost. Your assets? Gone. Credit rating? Tanked for years. With an IVA, the blow is softer.
- Debt Relief Orders (DRO): These are simpler but only cater to smaller debts and leave no room for asset protection.
- Debt Management Plans (DMP): A less formal approach, but it lacks the legal clout of an IVA.
If you want to go for an IVA, understanding how long does an IVA take to set up is crucial. Usually, it takes four to six weeks to set up an IVA. We will discuss this in detail towards the end of the article.
The initial steps to understanding How Long Does an IVA Take to Set Up: Is An IVA the Only Option?
For many individuals, an IVA is typically considered as a last resort, employed when no other viable debt resolution method is apparent. Most likely, it is not advisable to pursue an IVA if there are alternative means to clear your debt.
Engaging in an IVA means relinquishing the flexibility to independently manage your debt.
However, there are alternatives to consider, and we’ve outlined some below:
When considering how to address your debt, it’s advisable to explore these alternative avenues before committing to an IVA. It’s because they may offer more flexibility and suitability for your financial situation.
Points to Note When Understanding How Long Does an IVA Take to Set Up: Will An IVA Affect Credit Score?
Yes, An IVA is a permanent entry in your credit history. And it remains there for 6 years, even if you have successfully repaid all your creditors in full. That’s why, if feasible, it’s advisable to seek a less intrusive method for managing your debt.
Can You Still Get Credit With An IVA?
Once you have an IVA, obtaining additional credit becomes a mountainous task.
It does not matter if it is one of the following. Surely it will keep piling up:
- Applying for a new credit card
- Getting car finance
- Taking out a mortgage
- Secured loans
- Unsecured loans
- Equity release schemes (in some cases)
These options shrink considerably. But don’t lose hope yet. Sometimes, restrictions can actually save you from spiralling further into debt.
How Is An IVA Set Up?
The process of establishing an IVA to alleviate your debt involves the following 6 steps. The company responsible for overseeing the IVA arrangement will guide you through each of these steps. Here is a brief overview:
This structured process provides a framework for managing your debt through an IVA, with the guidance of the managing company throughout.
The Details of How Long Does An IVA Take to Set Up: How Quickly Can An IVA Be Put In Place?
Generally, the process of setting up an IVA takes approximately six weeks from your initial contact with an IVA firm to the commencement of repayments. However, several factors can influence the duration of the setup process, including:
It’s important to note that regardless of the time it takes to set up the IVA, it provides a respite from creditor pressure. You can inform your creditors that the IVA is in the setup process, demonstrating your commitment to resolving the debt, which can provide some relief.
Where to Get More Help in Understanding How Long Does an IVA Take to Set Up
If debt is eating away at you, you need to act fast. Consult a financial advisor or debt counsellor for personalised guidance. Sometimes, applying for an IVA online is a viable option, especially when time is of the essence. Still unsure where to turn? Speak to a debt charity for free advice regarding this. Some debt charities you can consider include:
- National Debtline
- Citizens Advice
- Step Change
Need more help?
In addition to the information provided, we have created dedicated articles explaining all other debt solutions available in the UK. If you require more detailed guidance on alternative debt management options, please explore our comprehensive resources.
Alternatively, you can fill out our online form to receive personalised debt help tailored to your specific financial situation. Our experts are here to assist you in finding the most suitable path to financial stability.
- An Individual Voluntary Agreement (IVA) is a legal arrangement in the UK that enables individuals to manage their debts by making regular payments to creditors without accruing further interest or facing harassment from creditors.
- Generally, it takes around six weeks from the primary consultation to the beginning of the repayment process.
- Apart from debt management, an IVA can also benefit UK residents by legally writing off a portion of their debt. It assures peace of mind along with financial stability.
- Before deciding on an IVA, it’s crucial to evaluate other debt solutions such as debt consolidation loans, negotiation with creditors, seeking debt counselling, or thorough budget planning.
- One must understand that an IVA will impact your credit score, making it challenging to secure new credit without explicit permission throughout its duration.
- To expedite the process, individuals can “apply for IVA online,” streamlining the setup process and potentially reducing the average setup time.
- It’s highly advisable to seek debt counselling or engage with a financial advisor to determine if setting up an IVA is the most suitable solution for your unique financial situation.