IVA FAQs

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Can anyone enter into an IVA?
An IVA is available to all individuals, who reside in England, Wales or Northern Ireland, who are struggling to make their agreed payments to their unsecured creditors and are able to afford at least £50 a month after living costs to repay their creditors. It is also usually a requirement that debtors have a minimum debt level of £6,000. This is rough criteria however so it is recommended you contact us for a full assessment of which solutions are available to you.
Will my IVA be accepted?

Whether or not an IVA is accepted depends totally on how the creditors vote. An IVA will be accepted provided more than 75% of the creditors by value, vote in favour. If this is achieved, then the IVA is accepted and all unsecured creditors will be bound by the IVA.

An IVA must usually offer a higher return to creditors than would otherwise be expected were the debtor to go bankrupt.

Your creditors judge each application for an IVA on its own merits when they are considering their voting stance. Deciding factors may be: the value of assets, level of debt, monthly repayment offer, reason for the debt and newness of the debt.

Creditors will expect a high level of commitment from the debtor during the term of an IVA. Socialising, holidays, gifts, beauty treatments, gym membership or any form of savings are classed as luxury expenses and are typically not accepted by creditors as essential areas of expenditure.

Creditors also have their own criteria, which they expect an IVA proposal to meet if they are to vote in favour. Our experienced team deal with the main banks and credit card companies on a daily basis and make every effort to tailor a debtor’s IVA proposal to meet the needs of the creditors involved.

How much does it cost?

As part of the process of setting up an IVA, we will assess your income and expenditure. This will help us ascertain your monthly contributions into the arrangement, ensuring that you can afford them and giving your arrangement the best possible chance of success.

Unlike most companies that provide IVAs, we do not charge upfront arrangement or assessment fees. Furthermore, you only start paying once your arrangement is agreed so if for any reason creditors reject your proposals or you choose to withdraw your offer, you will not have to pay for the work that we have done for you.

The monthly payments that you make into your arrangement will cover the payments to your creditors as well as the Nominee’s and Supervisor’s fees involved in an IVA. These fees will not affect your monthly payments, as by agreeing to the terms of the IVA your creditors agree to accept a lower return from the arrangement. This means that the payments remain affordable for you.

How long will an IVA last?

Monthly payments are usually made into an IVA over a period of 60 months (5 years). You may be in a position to make a Full and Final offer to your creditors. This type of IVA would usually be for a period of 12 months.

An IVA will continue as long as regular payments are maintained. Defaulting on payments could result in the failure of the IVA at which point the creditors could request that the debtor be made bankrupt.

Which debts can be included in an IVA?

The following unsecured debts can be included in an IVA. For example:

  • Bank account overdrafts
  • Credit or store cards
  • Outstanding VAT
  • Outstanding Inland Revenue debts
  • Loans from friends and family
  • Outstanding Hire Purchase shortfall payments on goods that you no longer have (typically repossessions or write-offs)
  • Mortgage shortfalls following the repossession of a property

You must however keep up full contractual payments to your secured debts and other priority debts (see below), an allowance for which will be made in your expenditure schedule.

Debts that cannot be included in an IVA are:

  • Mortgages and loans secured on your property (except shortfalls)
  • Hire Purchase Agreements (except shortfalls)
  • Magistrates Court Fines
  • Speeding penalties
  • Debts incurred through fraudulent activity under the Proceeds of Crime Act
  • Maintenance/CSA Arrears
  • Arrears on a rental property (however you may be able to include outstanding rent on a previous property)
What happens if i can't make payments into my IVA?

It’s important to keep up payments as non-payments can result in the failure of the IVA and may lead to bankruptcy.

When considering an IVA, it’s necessary to have a stable income that will last for the duration of the IVA, typically for 60 months (5 years). However, there could be any number of reasons to cause a reduction in income which then affects your ability to keep up payments. Examples include illness, redundancy, relationship breakdown and bereavement.

Therefore, during the term of the IVA, it’s vital that you speak to your Supervisor as soon as you think you may have a problem making a payment. There may be options open to you, but communication with your Supervisor is absolutely necessary to explore these.

What happens if my financial situation improves during the IVA?

It’s important to keep up payments as non-payments can result in the failure of the IVA and may lead to bankruptcy.

When considering an IVA, it’s necessary to have a stable income that will last for the duration of the IVA, typically for 60 months (5 years). However, there could be any number of reasons to cause a reduction in income which then affects your ability to keep up payments. Examples include illness, redundancy, relationship breakdown and bereavement.

Therefore, during the term of the IVA, it’s vital that you speak to your Supervisor as soon as you think you may have a problem making a payment. There may be options open to you, but communication with your Supervisor is absolutely necessary to explore these.

What happens if I receive a windfall during my IVA?
Your IVA will include a ‘windfall’ clause. Any assets, including lottery wins, bonus payments, gifts or inheritance have to be declared to the Supervisor and paid into the IVA for the benefit of the creditors. PPI is also considered an asset so any refund would need to be paid into your IVA.
Will my partner be affected by my IVA?

An IVA (Individual Voluntary Arrangement) is as the name suggests, individual to you. However if any of the debts were taken out in joint names, the other party will also be fully liable for that whole debt.

Your own liability for the joint debt will be taken care of by your IVA; however, the creditor can also pursue the other party for the full outstanding amount whilst your IVA is in place. Once your IVA has completed, the other party will remain liable for any remaining outstanding debt.

Who will find out about my IVA?

Unlike bankruptcy, IVAs are not published in your local paper. This is often a reason why people favour IVAs over bankruptcy as it is kept more private.

Your IVA will however be noted on the Individual Insolvency Register, held by the Insolvency Service. Any member of the public can access the Individual Insolvency register via the Internet.

Approved IVAs are also published in Stubbs Gazette, a magazine that can be requested by Insolvency Practitioners, finance companies and banks etc.

What will happen to my pension?

Your state pension won’t be affected by entering into an IVA, however your personal pension payments may be.

Creditors may vote with a modification asking you to suspend payments to a personal pension for the duration of the IVA. You would then be expected to pay this monthly amount into the IVA.

Creditors may request you reduce your pension payments so you can afford to pay more towards your IVA. If you are at an age below 55, you will be asked to minimise pension contributions. If you are aged 55 or above, you will be entitled to pay an average of the last 6 months’ pension contributions, subject to a limit of £75.

If you haven’t started a pension plan by the beginning of your IVA, you will still be able to join a scheme – contributions will be restricted however to 4% of your gross salary.

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