An IVA Debt Advisor is often confused with generic debt advice. So, to bust this myth and explain what an IVA Debt Advisor really is, we first need to explain debt advice and how they differ.
Read on to discover more about IVA Debt Advisors and how they might be able to assist you out of debt.
What Is Debt Advice?
Debt advice is when an individual or company provides a debtor with generic information on debt solutions and budgeting. They don’t tell the debtor what to do, but they tell them what is available and explain those options.
To some extent, debt advice in the correct sense is not advice at all. It is the process of passing on key information to the debtor so they can make their own decisions or future lines of inquiry.
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What Is a Debt Advisor?
A debt advisor is another term for debt counsellor. These people provide information on what a debtor should do to get out of debt by assessing their specific circumstances. They don’t just explain options available but explain the correct avenue for debtors to take and why that is the case.
The Differences Between Debt Advice and a Debt Advisor
Therefore, the main difference between debt advice and the work of a debt advisor/debt counselling is that the former is generic information that helps debtors make decisions, while the latter is information on why a certain decision should be made.
It may come as no surprise then that one of the tasks that debt advice includes is a recommendation or referral to a debt advisor or debt counselling company.
That Makes an IVA Debt Advisor….
If a debt advisor is someone who provides information on what a debtor should do to get out of debt regarding their specific situation, what is an IVA debt advisor?
Well, an IVA debt advisor is someone who provides debt counselling services with a specific focus on IVAs, one of the UK’s most common debt solutions for people with unmanageable large debt.
Their advice and recommendations will tell debtors what to do when applying for an IVA and how to improvise their chances of securing one.
But, What Is an Individual Voluntary Arrangement (IVA)?
An IVA is one debt solution, which is only suitable for people with large debts, usually exceeding £13,000.
It is a formal and very serious debt solution that becomes legally binding. Defaulting on the IVA terms can lead to bankruptcy.
It works by committing the debtor to pay one monthly fee which is shared between all creditors. Due to this being for larger debts, the repayments tend to be bigger than a Debt Management Plan and you will need at least £100 disposable income to secure an IVA, most often much more.
The IVA will typically last for five years and at the end of this term, any debt not repaid will be wiped. IVAs can be expensive but they often wipe over half of the debt owed!
Will an IVA Debt Advisor Assess Me for an IVA?
Yes, unlike debt advice which will only tell you about an IVA as a debt solution, an IVA Debt Advisor who does the same work as a debt counsellor will be able to assess your suitability for an IVA.
The first things that the IVA Debt Advisor will look at is your amount of debt. The IVA is not suitable for people with smaller debt. They will also look at the number of creditors you have. An IVA is only suitable for people with more than one debt.
Lots of debtors tick these boxes but don’t tick the last box. And that is the ability to make sizeable repayments each month. People with little disposable income or low earners are not likely to meet the amount needed to be repaid each month.
The details can be tricky, which is why the work of an IVA Debt Advisor is so valuable.
Can an IVA Debt Advisor Guarantee an IVA?
Getting an IVA is not as simple as putting forward a proposal that has been looked at by an IVA Debt Advisor.
Once the terms you are able to proceed with have been finalised, these will be put to all your creditors in a creditor meeting. The creditors will evaluate your proposal and vote on whether it should be accepted or not.
For an IVA to be secured, at least 75% of creditors must vote in favour of the arrangement. That means anyone with three or fewer creditors must get everyone to agree.
An IVA Debt Advisor may believe your proposal is sound, but they cannot guarantee you will get the IVA. They, and anyone else, simply cannot be sure of how creditors will react and vote during the creditor meeting.
How Much Does an IVA Debt Advisor Cost?
The fees for an IVA debt advisor can differ. Sometimes these people work within debt management companies and look over your situation for free. It is only if you secure the IVA with their company that you start paying for the IVA each month (this is common!).
On other occasions, you might seek out an IVA Debt Advisor independently and their fees could vary significantly based on their experience and your circumstances.
A Word on Debt Help Calculators
Another way to find out your suitability for an IVA is through debt help calculators. These are usually found on the same debt management companies and at debt charity websites. They are basically computers that process your debt information to see if you would be suitable for an IVA.
There have been concerns over IVA lead generator sites specifically of late!
They can be useful but they are not bulletproof. Dealing with a human IVA Debt Advisor is often the more robust way of knowing your IVA suitability as computers only process numbers and not real-life situations.
Discover More Helpful IVA Info!
For more help understanding the process and peculiarities of an IVA, read our popular IVA guide at Money Nerd!