Government IVA – What You Need to Know

You’re overburdened with debt and struggling to meet critical payments, such as your rent, council tax and groceries. You don’t remember the last day you enjoyed without overthinking your finances, and you probably feel as though you’ll be indebted for the rest of your life.

If this sounds like the situation you’re currently faced with, a Government IVA could provide you with the promise of a debt-free future. Here’s everything you need to know.

Where Does the Term Government IVA Come From?

Searching for a Government IVA? Contrary to popular misunderstandings, IVAs aren’t technically provided or managed by a government organisation. However they are regulated by the Financial Conduct Authority – a government body responsible for the regulation of 58,000 financial services firms, which is likely why they’re often termed ‘Government IVAs’.

With one misunderstanding cleared up, let’s now explore whether a Government IVA could be the right choice for you.

Worried about debts that won't go away?

An Overview of a Government IVA

A Government IVA is a formal agreement that is made between you and your creditors. It’s arranged through an IVA provider who acts as a mediator to make a proposal of a monthly repayment figure to those you owe money to. If approved you will make your payments to the IVA provider, who’ll then split the amount between your creditors.

Government IVAs run for either five or six years, depending on whether you own property.

Would an IVA Suit your Circumstances?

In order to qualify for an IVA you’ll need to have:

  • Debts of above £5,000 (or £15,000 with some IVA providers)
  • Debt Owed to two or more people
  • A regular income – through employment, benefits, a pension or a regular contribution from a third party
  • The ability to pay at least £70 per month
  • Residency in England, Wales or N. Ireland

Advantages of an IVA

  • Your IVA is continually reviewed every 12 months to ensure that it remains a suitable and sustainable solution for your situation.
  • An IVA can help you avoid bankruptcy, although you must ensure that you keep up with your monthly repayments, otherwise, your creditors may begin.
  • An IVA is based around how much you can afford on a monthly basis.
  • Any interest and charges on your debts are frozen from the time your IVA is approved.
  • Debts that are included in your IVA should be clear after five years, with any remaining balance written off at the end of the term.

Key Question: Does a Government IVA Cost Money?

While there is a charge for the service of the Government IVA provider, this is deducted from the monthly fee, rather than being charged up-front.

Worried about debts that won't go away?

Ready to take the next step and apply for a Government IVA? To find out more or to begin the process, speak with the National Debt Help team. Call us for free on 0800 002 9051 or send us a message via our contact page.

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