IVA’s Frequently Asked Questions

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Can I protect my house?

An IVA prevents creditors from taking action against you and your property. However, before the end of the IVA it may be necessary for you to introduce a sum of money into the arrangement in place of a proportion of your share of equity in your property. This is normally done by remortgaging your property. If remortgaging is not possible, you may be able to extend the arrangement for a further twelve months during which you time you pay additional contributions in place of equity.

How do the IVA fees get paid?

As soon as you decide to proceed with an IVA then your payments to creditors cease and contributions towards your IVA start. These will be set at a figure which you have agreed you can afford. It takes around 6 - 8 weeks to set up an IVA and your first two payments will be treated as a deposit towards our Nominees fees. Once your arrangement is approved you will only pay the monthly contributions agreed by your creditors.

Example : 60 monthly contributions of £300 = £18,000. Our fees are agreed with creditors and will be taken from your monthly payments.

Do I need to open a new bank account?

Yes, if you have debts with the same bank. Creditors have the right of set-off, which means they can take your wages to "set-off" against other monies owed to them. If you are not overdrawn and do not have loans or credit cards with your bank then you do not need to open a new bank account.

Please open a bank account with no overdraft facility. Creditors will generally insist that you do not incur future credit which includes allowing your bank account to be overdrawn. For help with opening a bank account see bank accounts

Is my IVA likely to be approved?

Yes, we would not recommend an IVA as a solution if we did not believe it had more than a reasonable chance of being approved. It would be unfair to you and a waste of everybody's time and energy. It is rare for any of the IVA's that we assist with to be rejected as creditors are generally willing to negotiate.

However, if the IVA is not approved you can put forward other solutions to your creditors including debt management and also bankruptcy. We will continue to help you.

How does this affect my credit rating?

An IVA will be on your credit record for six years which is the same length of time as any other adverse credit is recorded.

Will I still be able to obtain credit?

The IVA proposal normally states that you can only get credit if your Supervisor allows you to do so. This does not normally apply to individuals in business who can demonstrate that they need credit to be able to continue trading.

Will my creditors stop contacting me?

Yes, once your IVA is approved all further contact from creditors should cease. It may take a while for creditors to amend their systems but within 1 to 2 months of the IVA starting, all communication from your creditors will stop. Creditors are legally bound into the terms of an IVA, consequently preventing them from pursuing you for the debt.

Can my arrangement be brought to an early conclusion?

Yes, we can convene a variation meeting to offer a sum of money in full and final settlement of your obligations under the IVA. The sum of money could be raised by:

• Remortgaging your property
• Funds from a relative
• Cash in policies (Subject to getting you expert investment advice)

Creditors are likely to agree to accept a lump sum to bring the arrangement to an early end if you can show that you are paying creditors as much as you can afford.

What happens if I can't pay my contributions?

If you find you cannot maintain your payments, we can ask creditors to agree to a reduced payment or a payment holiday. Your IVA proposals will be drafted to include the power to put revised proposals to creditors.

We also offer contributions insurance which will cover your contributions for a period of twelve months, if you are unable to meet your contributions due to accident, sickness or unemployment. It is important that you keep us informed of any problems. We understand that most of us encounter unforeseen problems and we need to know so that we can help.

Who gets to know about my IVA?

Unlike bankruptcy your IVA is not advertised in a newspaper. Your employer will not know unless you choose to tell them. Your IVA is however, registered and this may be picked up by credit reference agencies who will note your IVA on your credit reference file.

What are downsides of an IVA?

The payment period for an IVA is normally 5 years unless creditors agree an early settlement. In Bankruptcy Income contributions are for a period of three years only. The extra 2 years of contributions with an IVA mean that creditors get a better payout which is why they support IVA's.

You have to make sure that you can afford to meet your contributions. If you fail to pay your contributions, and there is no reasonable explanation for the failure, your arrangement may fail. Creditors will no longer be bound by the arrangement and can pursue you for the full amount of their debt. Failure of the arrangement could also mean that the Supervisor has to petition for your bankruptcy. If you cannot meet your payments through hardship, we will always strive to vary or settle the arrangement, rather than fail it.