How an IVA can help you sleep at night again

A case study by Clive Williams at Hawkins Insolvency

When I met my client, let’s call him John, he wasn’t sleeping much. He was stressed and constantly worried. His relationships at home were strained and he didn’t know where to turn.

John’s business had failed when he lost a large contract. He didn’t want to lay off his staff and continued to fund the business using his personal credit cards. Although he was able to service the monthly payments on the credit cards for a while, it soon became impossible to meet the minimum payments.

In addition, he owed HMRC tax payments. He was under pressure from the credit card companies by phone and constant letters threatening further action if the debts were not repaid.

After thoroughly reviewing his financial situation, we decided that an IVA was the most appropriate route for him. An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between you and your creditors.

It sets out how much you’ll repay your creditors over a fixed period of time. Your creditors agree to stop any further action against you and they'll write off whatever remaining unsecured debt you can't afford to repay when your IVA successfully ends.

In John’s case, he had a house with some equity and a small boat. He was also due an inheritance from his mother who had passed away. Because he had a lump sum, we negotiated repayment of a smaller percentage of the total amount owed. We proposed payment to his creditors of 26p in the pound which he paid them when the assets were realised.

Over the course of two years John was able to repay a smaller percentage of the overall debt in various lump sums. It is only licensed insolvency practitioners that are empowered to make this legally binding contract with your creditors.

If you make any informal arrangements with your creditors yourself, it is not legally binding and your creditors can still take action against you. An IVA gives you peace of mind that you have legal protection from your creditors while you only repay what you can afford.

John successfully completed his IVA to the satisfaction of his creditors and he is now debt free. He is allowed to put a 200-word statement on his credit file to this effect which is viewed positively by future lenders. With the help of a licensed insolvency practitioner, John went from sleepless nights to being debt free.

To see how Hawkins Insolvency can help you call us for a free and confidential chat about your circumstances.