How quickly can an IVA be set up?

If you've tried to find out how long it takes to set up an IVA (Individual Voluntary Arrangement), you may have found that there is no definitive answer. Some say as little as two weeks and others say two months - and the truth is, it can vary. However, even if your IVA takes a few weeks to set up, it is still reassuring to know that you are taking steps towards tackling your unsecured debt problem.

The time it takes to set up an IVA actually depends on a few factors. For example, it depends on how quickly you can get the right information and documents together. Once you've given your Insolvency Practitioner all the information they need, they will make an IVA proposal to your lenders. Your lenders would then decide whether to accept this proposal, which could take varying amounts of time.

How is an IVA set up?

First you'll need to determine whether you're eligible for an IVA. If you can't afford your unsecured debt repayments every month, and you doubt you'd be able to clear those debts any time in the foreseeable future, you could be eligible.

To prove your eligibility, you'll need things like wage slips (or proof of your income), a bank statement (so you can work out how much you spend on essentials, like petrol and food, each month), proof of your mortgage or rent, and reference numbers for the unsecured debts you want to include in your IVA. You and your Insolvency Practitioner (IP) will go over this information and figure out how much money you have left every month to put towards your unsecured debts.

Once you've figured that out, your IP will propose this new amount to your lenders. Your IVA will go ahead if you receive approval from lenders accounting for at least 75% of your overall unsecured debts.

If you've got any more questions about IVAs, visit this page.

What are the benefits of an IVA?

When you've started your IVA, you'll benefit from making one, more manageable payment each month - which will be shared out between your lenders (minus any fees for the service). Interest and charges on your debts will be frozen too. After (normally) five years, if you've stuck to your payments as agreed, any remaining debt included in your IVA will be written off.

Your Insolvency Practitioner will guide you through the process, and organise an annual IVA review to check whether your IVA is still going to plan. You'll also be legally protected against your lenders during your IVA, so they won't be able to take you to court, ask for higher payments or try to make you bankrupt.

What else is there to think about?

An IVA could be the best way for you to free yourself of unmanageable unsecured debt - but it has its drawbacks. Your credit rating will be damaged for six years, for example - although if you'd carried on struggling with your debts, this also would damage your credit rating. Your details will be recorded on the Insolvency Register - which is publicly available.

During the final year of your IVA, you may be asked to release equity in your home (if you're a homeowner), which would leave you with a smaller deposit when it comes to remortgaging.

Starting an IVA is therefore a big decision, so if you're considering one it's important to get some expert advice. If you'd like to speak to a debt professional, fill in this form to find out if you might qualify for an IVA, and an expert will be in touch to discuss your options.

By Matthew Plant.