Individual Voluntary Arrangement (IVA) & Debt Relief Order (DRO) Info, advice and help thread.

sourcrates

Updated 21/05/2023

DRO (Debt relief Order).

There is info on the net and in the link provided below, but these are the main practical features -

(1) Total debt must be no more than 30k

(2) Must not be a homeowner (not even with neg equity)

(3) Asset limit is now £2000 as well as a vehicle valued at up to £2000.

(4) Monthly disposable income (after all reasonable expenses) of £75 or less. 


ONLY the debts listed will be written off. If a debt comes to light that pushes over the 30k limit then the order will be revoked.

The conditions regarding restrictions on employment, borrowing, trading whilst undischarged are all the same as BR.

Debts that can go in to BR can also go in to a DRO.

The DRO period.

Once you get your DRO, you stop making payments towards the debts listed in it.

A DRO lasts 12 months. This is called the DRO period. The DRO period can be extended in some cases.

At the end of the period, your DRO is closed and you will not have to pay your debts back.

You do have to keep paying any regular commitments during the DRO period, like rent and bills.

If applicants financial situation improves within the year then the order may be revoked or applicant may be asked to contribute towards debts.

No early discharge.

MAIN ADVANTAGES;

There is no involvement of the court.

The cost is £90, and is able to be paid in instalments through payzone and post office outlets.

Your details will not be placed in the London Gazette, however your name will appear on the Insolvency register for a period of 15 months.
DRO info is available on insolvency service web site.

You must apply through an intermediary, so advice must have been taken. Intermediary will assist with application, which is on line only. No fee can be charged by any intermediary.

Further information can be found here -

How to get a Debt Relief Order (DRO) - GOV.UK (www.gov.uk)


IVA (Individual Voluntary Arrangement.

IVA`s are only really suitable for a small minority of individuals, mainly those who fit the following criteria -

(1) Should be a homeowner or have significant assets to protect, so cannot go bankrupt,

(2) Should have debts over 30k,

(3) Have a regular source of stable income, as arrangement can last 60 months.

IVA`s have a terrible reputation for being mis-sold to those who are totally unsuited to such an arrangement.
If you don`t fit the above criteria, then it`s likely another option would be more suitable for you.

Unfortunately, regulation is not as tight as it could be in this sector, and debt management companies using their own "inhouse" IP`s can make significant profit from the fee`s charged for these arrangements, which has led to many people being "sold" an IVA when it was totally unsuitable for them.

Always obtain good, independent advice before opting for any regulated debt solution. 

More information on IVA`s here -

How to apply for an IVA - Citizens Advice

And if you do decide to have one, make sure you use a recommended IP, such as the one Stepchange use -

IVA - Individual Voluntary Arrangement Advice. StepChange

Phil538

Hello, my wife had to take out an IVA due to a failed business venture, she is in the 5th year of payments, and is now 55 years old, I am 63 years old and am on the brink of retirement. The IVA company are now forcing her (us) into taking equity release to secure more payment from her, so I am wondering what is the best option to use. This situation was totally unexpected, so we have not explored any available options as we had no intention of ever using ER at any stage in the future 

sourcrates

Hi, you cannot be "forced" into anything.

As a homeowner, its standard practice in an IVA to be asked to re-mortgage in year 5, I suspect that is what they are referring to, I cannot see them asking you to release equity in that way.

If re-mortgage is not possible, then its usually another year of payments, just tell them what they ask is not possible, and opt for the extra year of payments instead.

Saskia10

Hi I'm so confused firstly I don't feel my IVA was explained correctly to me when I took it out 2 1/2yrs ago for example I didn't realise that I paid them money too to sort it out.
And secondly I was not told about the windfall Claus that I have now found out about.
I was in a desperate situation when I took it out but 💯 was not told about it.
My situation is I was dismissed from my job and have for the last six months started the process of taking my previous employer to a tribunal on the grounds of race and disability discrimination.
However my previous employer has offered me an out of court settlement for me not to take it further.
I have had to go on benefits because of the impact on my physical and mental health this situation losing my employment after working there for 12 years has caused me. and I also have a child with special needs to look after so has you can imagine finding another job that fits around all of that starting out has been and is very difficult.
So my question is will the IVA company take this from me?
Because I don't see any point in accepting the offer of they do.

I apologise for this being a long post.
Thank you 

fatbelly

I imagine that it would be taken under the windfall clause unless specifically excluded. You would have to read what you signed.

When you went on to benefits, was your IVA payment reduced? What to? I'm a bit surprised that you are still in an IVA if your only income is benefits.

The other thing you need to look at is the impact of this lump sum on your benefits