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
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 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. Usually the monthly payment will not be below £120.
If you use the IVA Calculator we will pass your details on to one of our partners who will contact you and explain all the options available to you. They will then be able to help you set up a debt solution which is right for you.
Before entering into any debt solution you should ensure that you have considered the implications. Failure to keep up with repayments can result in bankruptcy or legal action. Lenders are not obliged to accept less in settlement of a debt than they are entitled to or to freeze interest or charges. Not all solutions involve debt write off and some solutions may result in the total amount payable increasing, or the period over which it is to be repaid increasing. Debt solutions affect credit ratings which record all financial activity for 6 years.
The debt solutions offered by our partners depend on your criteria and circumstances; including how much you owe and how many creditors you owe money to. You need to speak to a debt advisor to obtain a full assessment.