Individual Voluntary Arrangements (IVA)
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Ask your advisor for a personalised IVA example to see how much unsecured debt you could write off and calculate how much you could save per month!
We’ll ensure you only pay back what you can honestly afford, starting from £90/month
Never have to deal with scary phone calls or threatening letters from creditors demanding payment
No worrying about bills, payday loans, credit cards or debt collectors
“Without doubt the most professional Practitioners bar none. All conversations by email & telephone with both Marian & Zainab where extremely friendly & knowledgeable and not only put me at ease but gave me a better understanding of an IVA”
“Really quick to get IVA in place, Polite and interested in my problems and non-judgemental. Anyone who deals with this company will be able to stop worrying about creditors and will possibly be relieved of a lot of undue stress”
“When I first looked at this company the first person to call me (Steve) was very friendly and extremely helpful with understanding my situation. I didn’t realise I was in so much debt but now I am looking forward to a better financial future”
If you’re struggling to repay your loan debts, one solution is having them written off.
This article will outline the definition of a debt write off, how to write off loan debts, the specific situations where creditors will be more likely to write them off, and finally the different repayment plans available that, if followed through successfully, can result in a large portion (or even all) of your debts being written off.
If your debt is written off, it means that your creditors (the people or company(s) that you owe money to) agree not to pursue you further to repay it.
Each debt write off is very individualistic, and many factors will be considered by your creditors before they decide to agree to write off your debts.
Some common situations which might influence whether your creditors agree to your debts being written off include: serious mental or physical health issues, unemployment as a result of something outside of your control, or potentially any other reason resulting in your inability to repay your debts.
If your creditors agree to write your debts off, you’ll then be completely exonerated from repaying them.
However, debt write off does result in some consequences.
Any write-offs will be recorded on your credit file, which will in turn harm your credit score and negatively impact your ability to be approved for loans in the future.
Direct debt write off involves you arranging a settlement deal with your creditors.
Indirectly writing off your debts requires you to agree to a formal repayment plan first.
If you successfully complete your plan, any debt remaining at the end of the arrangement will be written off.
The first step in how to write off loan debt is to get in contact with your creditors directly and see if they’re willing to negotiate a deal to settle your debts.
Remember, creditors are people too, and if you can prove that you’re seriously struggling to pay them back, they will be more inclined to arrange a fair settlement.
An example of where you can arrange a fair and direct write off is by offering a final settlement for the remainder of your debts.
This will be better suited if you have a lump sum available which will pay off part or most of your debts.
Creditors will likely be more willing to accept a part payment of your debt or agree for the rest to be written off if you have a guaranteed sum available to pay them.
It is important to acknowledge that creditors will primarily want you to try and repay the full amount you owe them with any interest on top.
Debt write-offs are rare and usually only considered in specific scenarios.
However, with the above being said, there are situations where your creditors are more likely to agree to having your debts directly written off.
These can include:
If you think one of the above points applies to you, in order to qualify, creditors will require you to provide evidence which clearly outlines why you won’t be able to pay them back in a reasonable time period.
This evidence should distinctly demonstrate that it would make more sense and be more beneficial for your creditors to cut their losses and relieve you of your debt responsibilities, instead of pursuing you further to repay them.
Please note that if you can provide evidence, you must ensure that it is definitive.
For instance, for medical related issues, you’d need concrete confirmation from your doctor or healthcare professional before your creditors begin to even consider your debt write off proposal.
If a direct deal cannot be agreed upon, your only other option is to look into more formal insolvency and debt resolution methods.
Listed below are the different arrangements available.
Have a read through each of them to identify which one will best suit your situation:
Debt relief orders are applicable for those either on a low income or possesses very few valuable assets.
The principle of a DRO is that your creditors freeze your debt for a year.
If your financial situation hasn’t improved and you are still unable to pay your debts after the allocated year, they will be completely written off.
If you’d prefer a quick summary, IVAs are legally binding agreements between you and the people you owe money to (your creditors) which last on average, 5 years (but this period of time can be completely dependent on an individual’s agreement).
If you are consistent with your monthly payments and finish your agreed IVA term, you will qualify for the remainder of your agreed debts to be completely written off.
On average, IVA’s have written off between 50% and 60% of an average debt amount of £60,000, resulting in a £25,000-£30,000 reduction in the total amount previously owed.
Therefore, if you plan strategically and are dedicated to meeting your monthly repayments, you may be able to write off a significant chunk of your debts.
However, before being approved for an IVA, you must be able to evidence that you will be able to consistently meet monthly repayments over your agreed time period.
At the time of writing this article, creditors will expect a minimum of £70.00 a month to contribute towards your IVA.
Alternatively, some people, if they have the option, may prefer to provide a lump sum upfront (like a deposit) as a way to reduce their monthly repayments.
Once an agreement has been reached, all previous interest and charges on your debts will be stopped, and your creditors will be prevented from enforcing further penalties against you; including a petition for your bankruptcy.
The most important thing to remember about IVAs is that they are legally binding, meaning once you’ve signed one, there are likely to be harsh penalties for defaulting or cancelling it.
Arguably the most well known type of insolvency, bankruptcy, if successful, will write off all your debts that are permitted to be included in a bankruptcy order.
These will include almost all consumer debts such as credit cards, personal loans and car loans as well as utility arrears and overdrafts.
However, it is important to note that there are also many types of debt which a bankruptcy cannot relieve you of.
These include: child maintenance arrears, criminal fines, fraudulent debts, mortgages or debts secured against your home, social fund loans, student loans, court-ordered loans and TV licence arrears.
If you have any assets of value, they’ll be assessed to see if they can be used to pay off your debts.
You’ll usually be able to retain essential tools or equipment which you might need to generate your income, such as your toolkit if you’re a tradesperson or car if it’s absolutely necessary for you to travel to work.
In summary, with all the above in mind, it is important to remember that having your debt written off should be seen as a final resort if you are certain that you will be unable to repay your debts in a timely manner.
Although you’ll be cleared from repaying any debts, it will be recorded on your credit file, which will severely damage your future ability to retrieve credit.
However, if there is no other solution but having your debts written off, first get in contact with your creditors directly to see if you can organise a final settlement.
If that option isn’t available, it is advised to look into formal repayment plans such as a Debt Relief Order, Individual Voluntary Agreement or Bankruptcy.