Frequently asked questions about IVA
For more detailed articles about these issues click here. For quick answers see below.
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 repay their debts can apply for an IVA as long as
their disposable income is over £170. However if
your income is unstable then it may not be
appropriate to do an IVA. Try our IVA Calculator to find out if you qualify
If voting creditors owed more than 75% of the overall debt held by all creditors voting on your IVA the IVA will be accepted and all other creditors bound
If your creditors don't all vote in favour you still have the option of bankruptcy or an informal arrangement with your creditors.
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.
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.
When you are in an IVA you won’t 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?
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.
This figure will depend on your personal circumstances and will be agreed between you, the IP and your creditors. Usually the monthly payment will not be below £100.
The above is provided as information only. Iva.co.uk does not provide debt advice. You must always seek professional advice before taking any action to resolve your debts.