Frequently asked questions
Who can do an IVA?
An IVA can be used by nearly all UK residents.
- Single people where debt is in just one persons’ name
- Married / Co-habiting people where debt is in joint and single names
- Business Owners and Self Employed people
- Homeowners with one house or many
It really is suitable for lots of different situations.
What are the living costs in an IVA?
Anything you need to pay regularly is classed as a living cost. For example, Mortgage/Rent, Food/Groceries, Clothes, Travel/Transport, Car HP, Fuel, Parking costs, Council Tax, Electricity, Gas, Heat and Light, Phone, Mobile, Internet, even Sky TV if you have it…
In an IVA you will have an agreed budget for your all your living costs. These expenses will be mostly based on what you currently have to pay out each month. You should declare all normal monthly expenses so we and your creditors can understand the full extent of your situation. There may be restrictions on some expenditure items, such as mobile phone for example. There may also be extra allowance for special circumstances in some cases.
How long does an IVA last?
Typically an IVA can last for about five years, but in some cases this can be extended. It is also possible to do an IVA in a shorter period of time, if you can produce a partial or full lump sum of money. The good thing about an IVA agreement is you will know exactly when it is complete as it will be outlined in your agreement.
Will my credit rating be affected in an IVA?
Whilst you are in an IVA, you will understandably not be able to obtain credit of any sort and you will have to give up any existing credit that you have. This continues until your IVA is complete. So, your credit rating is not affected forever. When it is finished your credit rating should begin to repair itself.
- You only have to make one monthly payment or in some cases a one-off payment
- Your monthly payment will be affordable and within your monthly budget.
- The stigma of bankruptcy is avoided
- Unlike bankruptcy, an IVA is not reported in local newspapers
- An IVA is just between you and your creditors, so it’s confidential
- Protection from creditors, once the IVA is agreed your creditors cannot bring any action against you as long as you comply with the IVA
- Unsecured debts cleared usually in 60 months
- An IVA could safeguard your property
- An IVA can be complete in as little as 1 year if you can offer a lump sum payment
- All interest and charges are legally frozen.
- An IVA is suitable for homeowners, individuals or couples and even business owners
- If you are a homeowner with equity in your property you may be required to introduce part of your share of this equity in the final year of the arrangement. A remortgage may be restricted and on less favourable terms. If you can’t get a remortgage your arrangement can be extended for up to another year
- If your circumstances change, and your insolvency practitioner can’t get creditors to accept amended terms, the IVA is likely to fail. You will still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your IVA
- If your IVA fails, your creditors may request that you be made bankrupt. This will always be discussed before your arrangement commences
- Your credit rating may be impacted for up to six years from the commencement of your IVA
How do I go about setting up my IVA?
Initially all you need to do is simply complete the IVA online application form through one of our partners. By doing so your current circumstances will be reviewed and an advisor will advise whether an IVA is indeed the most appropriate solution to your problems. Once you send your statement, the advisor will either confirm an IVA as appropriate or offer alternative solutions.
If an IVA is deemed appropriate, and you still wish to pursue this option, you will be provided the opportunity to ask specialists any further questions. A “Proposal to Creditors” will be created which explains in detail the circumstances of your current problems and your proposals to repay what you can reasonably afford.
The proposal is sent to you for review. If you’re happy with everything you sign the proposal and we commence formal negotiations with all your creditors to put the IVA in place.
Will my creditors agree to an IVA?
Most creditors are fully aware of an IVA, as it’s been in existence for over twenty years. If 75% of your creditors by value vote in favour of your IVA, then all creditors are bound by its terms. Creditors can suggest alterations to your proposal and you can choose whether to accept them or not. If your creditors vote against your proposal you still have the option of an informal arrangement.