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Debt Solutions
IVA Information
IVA - Common Questions
Why have I not heard of IVA's?
With the increasing debt situation in the UK, IVAs have caught the public and media attention. Over 40,000 people enter IVAs each year. IVAs are a highly regarded, ethical and moral way to deal with debt problems whilst avoiding bankruptcy.
Who can enter into an IVA?
Any insolvent individual who cannot pay their debts can apply for an IVA as long as your disposable income is over £200. However if your income is primarily made up of benefits it is unlikely that your IVA will be accepted.
What if my creditors don't agree?
If 75% of your creditors who vote at the meeting are in favour of your IVA proposal it will be approved. If it is approved all creditors whether they voted or not will be legally bound to the arrangement as well. During the negotiations creditors can suggest modifications to the proposal and you can choose whether to accept them or not.
What if my creditors aren’t all in favour?
If your creditors don't all vote in favour you still have the option of bankruptcy or an informal arrangement with your creditors.
Will my credit rating be affected?
If you undertake an IVA, you will have to give up all your current credit (e.g. credit cards and store cards) and you will not be allowed to take additional unsecured borrowings until your IVA is completed. However you will be allowed to use pre paid cards.
The bottom line is that undertaking and IVA does not mean that you are “Blacklisted” for ever. Once it is complete your credit rating should repair fairly quickly.
How will an IVA affect my current credit?
Your current credit (e.g. credit cards and store cards) will be inactive and you will not be allowed to take additional unsecured borrowings until your IVA is completed. In fact, it is possible to take or change a mortgage even while you are still within an IVA but you will need to make sure you get the advice of your Insolvency Practitioner for this.
Will my home be safe?
When you are in an IVA you won’t usually have to sell your property. However you may be required to release equity by taking out a remortgage in the last year.
Who pays the IVA fees?
The creditor pays the IP to manage the IVA on their behalf. During the course of the IVA your contributions will go towards a creditor pot. The money in the pot will be handed over to the creditors at yearly intervals, and at the end of the 5 year term all outstanding debts are written off. This pot is looked after by the IP. Once the IVA has started this pot does not belong to the debtor but to the creditor. IP fees are agreed to and paid for by the creditor out of this pot.
Should I pay no-win, no-fee upfront fees?
IVA proposals are tricky to put together and can sometimes be 15 pages long. It is therefore important that the proposal is as accurate as possible both to ensure that it is passed and that you are able to meet your monthly commitments. Poorly constructed IVAs can result in bankruptcy as the debtor may fail to make the agreed contributions. Therefore paying a no-win,no-fee upfront fee can be a way of ensuring your details are as accurate as possible and that you get the best possible customer service. Obviously you should shop around and talk to at least 3 companies before making a decision.
How much will I have to pay Into my arrangement?
This figure will depend on your personal circumstances and will be agreed between you, the IP and your creditors. Normally the monthly payment will not be below £200.
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