IVA FAQs - Questions and Answers
IVA FAQs - Questions and Answers
Listed below are some of the most frequently asked questions for those who are either looking to enter into an iva or those who are already within an IVA.
We have provided each question with a brief answer but if you feel you would like a little more information you can click on 'Read more' at the end of each summary. This will take you to a further, more 'in depth' article, providing you with a deeper understanding of the answer you were looking for.
Thinking about an IVA
- What is an IVA
- Who can qualify for an IVA
- How much does an IVA cost
- Will I have to attend court to do my IVA
- Can I do an IVA if I am self employed
- Will I need to set up a new IVA bank account
- How will your creditors react to an IVA
- Can I enter an IVA if I'm unemployed
- If I enter an IVA will I be made to sell my house
- Will I have to sell my car if I enter an IVA
- Will an IVA affect my credit rating
- Will my IVA affect the people I live with
- Who will know about my IVA
- How do I find the best IVA company for me
- What are Joint IVAs
- What debts can go into an IVA
- Can an IVA include a CCJ
- Setting up an IVA
Already in an IVA
Ask your own question
If you would like to ask a specific IVA question relating to your personal circumstances, or if you still have not found the IVA answers you were looking for then simply call 0800 088 7502 to speak to one of our IVA advisers or, alternatively, complete this form and one of our advisers will call you back at your preferred time.
What is an IVA?
An IVA is a 'formal' debt solution introduced by the Government as part of the Insolvency Act 1986 to act as a practical alternative to Bankruptcy.
An IVA provides a new structured payment arrangement to creditors, for those people who are unable to afford their contractual debt repayments.
With a predetermined 'fixed' repayment period normally consisting of 60 months, an IVA enables the applicant to make payments based on affordability rather than their contractual obligations.
Once an IVA has been approved by creditors they are legally obliged to cease all legal action, freeze all interest and stop adding any late payment charges.
On successful completion of the IVA, the creditors are legally obliged to write-off any outstanding debt, leaving the applicant completely debt free. Read more.
Back to FAQsWho can qualify for an IVA?
Anyone who lives in England, Wales or Northern Ireland, or has done so within the last 6 months can apply for an IVA.
People living in Scotland have their own version of an IVA and it's called a Protected Trust Deed.
Whilst there is technically no minimum debt level required to qualify for an IVA, general opinion suggests that an applicant should have unsecured debts amounting to more than £10,000.
Furthermore, whilst it isn't a requirement for the applicant to have missed any of their contractual debt repayments, the prospects of doing so should be imminent.
Applicants can be employed or self employed and can be homeowners or tenants. Read more.
Back to FAQsHow much does an IVA cost?
IVA.info does not charge any set up fees or application charges to help you enter an IVA.
But there are no 'free' IVAs and, irrespective of which Insolvency Practice you choose to help you, all Insolvency Practitioners charge fees for their services.
The good news is that, in the vast majority of cases, these fees are paid for by your creditors, using money you pay into your IVA. Read more.
Back to topWill I have to attend court to do my IVA?
No, you don't need to attend court.
For the vast majority of applicants, the IVA application process is conducted at 'arms length'.
This means that, unless you would prefer otherwise, all your dealings with the Insolvency Practitioner and their staff will be via telephone and/or email.
You will not have to attend court and you will not be confronted by your creditors. Read more.
Back to FAQsCan I do an IVA if I am self employed?
Yes, it's perfectly acceptable to propose and enter an IVA if you are self-employed.
All the normal IVA qualifying requirements still apply, but you'll also be asked to provide some trading accounts or a cash flow forecast, to verify your income. Read more.
Back to FAQsWill I need to set up a new IVA bank account?
Not necessarily.
If your bank account is without any credit facility, such as an overdraft, and you do not have a loan or a credit card with your current bank, then you will not need to open a new bank account.
But if you have an overdraft, a loan or a credit card with your current bank, then you will need to move to a new provider and open a basic bank account with a new bank. Read more.
Back to FAQsHow will your creditors react to an IVA?
Since the introduction of the IVA Protocol in February 2008, most high street creditors have become very familiar with IVAs and, in most instances, are supportive of them.
They each have a well documented company policy which outlines their stance on IVA proposals.
Occasionally, a creditor may be in the process of taking enforcement action at the time of application and, if necessary, your Insolvency Practitioner can intervene.
They can apply for an Interim Order, a court order which forces the creditor to halt legal action until after the outcome of the creditors' meeting has been established. Read more.
Back to FAQsCan I enter an IVA if I'm unemployed?
Yes, technically speaking, you can enter an IVA if your are currently unemployed.
However, it's likely that other surrounding factors will determine whether an IVA is the most suitable solution for you, such as your employment prospects, the amount you can afford to repay and the level of your debt.
We think it's best to have a chat with a professional debt adviser to fully understand your choices and the obligations that come with an IVA, before you commit yourself. Read more.
Back to topIf I enter an IVA will I be made to sell my house?
No, unlike Bankruptcy, an IVA protects property and the equity held within it. As a result, an IVA applicant will not be required to sell their home.
Instead, creditors will demand that you try to release any equity at a pre-arranged time during the IVA term.
Fortunately, creditors' expectations will be limited by the IVA protocol ensuring they can't force you to sell your home if you can't release equity from it.
Instead the IVA will be extended for 12 months in lieu of any equity that can't be released. Read more.
Back to FAQsWill I have to sell my car if I enter an IVA?
No, you will be able to keep your car.
Your creditors understand how important it is to be mobile and recognise that, for many, losing their car would make their lives unbearable.
There are some restrictions to the value of car you'll be able to keep during an IVA, but these limitations are generally regarded as being reasonable, especially when compared to those limits imposed by the Official Receiver under bankruptcy. Read more.
Back to FAQsWill an IVA affect my credit rating?
Yes, an IVA will damage your credit rating for 6 years.
During the IVA you must refrain from applying for any further credit however, once the IVA has been completed successfully, that restriction is lifted and you can begin the process of rebuilding your credit rating. Read more.
Back to FAQsWill my IVA affect the people I live with?
No, entering into an IVA will have no bearing on other people living at your address.
Credit ratings are personal to each individual and, whilst the individual's address may be known to the Credit Reference Agencies, the actual address is not 'black listed' as may people think. Read more.
Back to FAQsWho will know about my IVA?
An IVA is a private arrangement and, as such, it is not advertised to the general public.
This can be of great confort to those people who feel embarrassed about their debts and wish to be awarded a degree of privacy. Read more.
Back to FAQsHow do I find the best IVA company for me?
Selecting an Insolvency Practitioner to prepare your IVA can be a tricky business.
Well, IVA.info are IVA specialists, which gives us a unique position in the IVA industry to help you make that choice.
From our very first involvement, our sole aim is to ensure that your IVA reaches a successful conclusion, giving you the very best chances of achieving your goal of becoming debt free. Read more.
Back to FAQsWhat are Joint IVAs?
Joint IVAs offer two people, sharing a common financial budget, a chance to reach agreement with their creditors in much the same way as a 'single' IVA does.
Again, payments are based on affordability and set for a fixed repayment term, after which time all debt left unpaid by the IVA contributions is legally written off by the creditors. A joint IVA application can be made by any two people sharing a common financial statement and are not solely reserved for couples in a relationship. Read more.
Back to FAQsWhat debts can go into an IVA?
An IVA can only deal with unsecured debt problems.
Discover how an IVA treats both unsecured and secured debts, and learn how the differences between these two types of debt will define to your IVA Read more.
Back to topCan an IVA include a CCJ?
Yes, an IVA takes priority over a County Court Judgement and, as a result, the judgement debt is absorbed into the IVA.
The creditor holding the CCJ loses their priority status and any payment arrangement to the judgement is stopped. The creditor then receive a share of the IVA dividend instead. Read more.
Back to FAQsSetting up an IVA
Setting up an IVA should be a straightforward process, so long as you receive the right advice from the beginning and this is why you need IVA.info by your side, providing you with reliable advice from the outset. Read more.
Back to topPayment problems in an IVA
Payment problems can occur for many different reasons, but any change to your 'fixed' budget is going to be noticeable to you.
First thing you need to do is contact your Insolvency Practitioner and notify them you are experiencing problems with your IVA payments.
They have different options available to help you, so talking to them just as soon as you know you have a problem will give you the best chance of keeping your IVA on track. Read more.
Back to FAQs > Back to in an IVA FAQsCan I change cars in an IVA?
Yes, you can change vehicles whilst in an IVA.
The issues you'll probably experience will be related to the practical aspects of making the change as finding the funds to buy a new car may be difficult.
So, just to ensure you're aware of all the potential issues you may face, it's advisable to liaise with your Insolvency Practitioner beforehand, and discuss your intentions with them prior to jumping in with both feet. Read more.
Back to FAQs > Back to in an IVA FAQsWill my IVA be affected if I change my job?
The main consideration relating to your employment is that it provides you with sufficient income to maintain your personal expenditure at a reasonable level, whilst generating enough surplus to make your IVA payments affordable.
If your new income is similar to your old income, then it's unlikely that the change will have any real impact on your IVA.
If your new income is higher, then your Insolvency Practitioner will undertake a new assessment of your personal circumstances to see if your IVA payment should increase but , fundamentally, your IVA would continue as originally agreed.
But, if your new income is lower, and your ability to sustain your agreed IVA payments is reduced, then there will be a negative affect on the IVA. How big an affect will be determined by the size of the reduction. Read more.
Back to FAQs > Back to in an IVA FAQsI'm in an IVA but can I work for myself?
Yes, you can become self employed whilst you're in an IVA.
But, as with any change to your personal circumstances, you should take a moment to consider the implication that making such a fundamental change might have.
IVAs are designed to bring financial stability to any given situation. You should consider what affect such a significant change will have and whether you'll still have the means to keep up with your IVA payments.
It is advisable, therefore, to undertake a thorough analysis of your new business, generate a realistic cash flow and make sure you're aware of all the responsibilities related to being self-employed before you commit yourself.
And, once you're happy you can make the transition without any serious issues, you should inform your Insolvency Practitioner of your plans. Read more.
Back to FAQs > Back to in an IVA FAQsCan I get a mortgage when I'm in an IVA?
Technically, there are no reasons why you can't apply for a mortgage when you're in an IVA but there will almost certainly be significant practical issues you'll need to overcome.
Any mortgage lender operating in this market place will require a very large deposit and charge much higher interest that typical High Street rates. Read more.
Back to FAQs > Back to in an IVA FAQsFull and final settlement calculation
Knowing how much to offer creditors is always difficult to establish, as the figure will be determined by your individual circumstances.
Where the funds are coming from will also have a major influence on the offer you make, be it from 3rd party funds or through the sale of an asset.
Equally, your personal circumstances will determine the strength of the offer through the eyes of your creditors and influence whether they'll be happy with the offer you've put forward. Read more.
Back to FAQs > Back to in an IVA FAQsCan I take a payment break?
Historically, payment breaks were a grey area in the IVA world, but this all changed with the introduction of the IVA protocol.
Now there are defined payment breaks that can be given, at the sole discretion of the Insolvency Practitioner.
If you are struggling to maintain your IVA contributions you should talk to your Insolvency Practitioner as soon as possible. When deemed necessary, they have the means to provide a temporary break or reduction in your payments, without the need to obtain credit consent. Read more.
Back to FAQs > Back to in an IVA FAQsWhat happens if I receive a windfall during my IVA?
There is a 'Windfall Clause' within an IVA's standard terms and conditions.
The windfall clause obligates you to notify your Insolvency Practitioner if you receive any sum of money beyond that of your normal household income.
The windfall clause defines which funds you'd be allowed to keep and which funds you'd be obliged to pass into your IVA for the benefit of your creditors. Read more.
Back to FAQs > Back to in an IVA FAQsCancelling an IVA
Simply cancelling an IVA is not an option as an IVA is a legally binding 'formal' solution, sanction by the Court.
There is, however, a procedure that can be undertaken if you wish to bring your IVA to a premature close, but terminating an IVA should not be done lightly.
It is always a good idea to seek a 2nd opinion if you have the slightest doubt. Read more.
Please Note: If you have been approached by a 3rd party company advising that your IVA has been mis-sold, you should bring the matter to the attention of your Insolvency Practitioner.
There are many unscrupulous companies fishing through the Insolvency Register, looking for new clients. They often use misinformation as a tactic to unsettle IVA clients in the hope they will be able to then levy heavy bankruptcy charges.
Back to FAQs > Back to in an IVA FAQsCan I continue to trade whilst in an IVA?
A big concern for self-employed sole traders is whether their trade will be affected by their IVA.
This article explains how an IVA will allow a sole trader to trade through the IVA without any problems. Read more.
Back to FAQs > Back to in an IVA FAQsIVA Variation Creditors' Meeting
A Variation Meeting provides the chance to modify an ongoing IVA.
As with the original Creditors Meeting, an approach is made by the debtor via their Insolvency Practitioner, with the variation being put forward for consideration.
Creditors then vote on whether or not to accept the variation that's being proposed. Read more.
Back to FAQs > Back to in an IVA FAQsBeing credit checked whilst in an IVA
It is possible that you may be subjected to a credit check during the term of your IVA.
If you are, then the creditor concerned will be able to see reference to your IVA. Read more.
Back to FAQs > Back to in an IVA FAQsUnderstanding your annual IVA review
Most Insolvency Practitioners undertake an annual review of each IVA they are supervising.
The reviews give the supervisor an opportunity to health check the IVA and ensure that the debtor is adhering to all their legal obligations.Read more.
Back to FAQs > Back to in an IVA FAQsWhat happens after my IVA finishes?
Once you have successfully completed your IVA you will be debt free.
You will receive a certificate of completion from your Insolvency Practitioner and your credit file will show your IVA as 'satisfied'.
You will then be able to move forward without the weight of your debt, you will have a substantial increase in your disposable income and you will have the satisfaction of knowing your financial circumstances are back under your control. Read more.
Back to FAQs > Back to in an IVA FAQsCan I finish my IVA early?
Yes, it is possible to bring an IVA to early completion.
The introduction of 3rd party funds is a very common method of bringing an IVA to an early settlement. Creditors are approached with details of the offer and, if they accept, the IVA completes early.
There are other ways in which an IVA might be brought to an early close, perhaps through a windfall payment such as an inheritance, or as a result of a redundancy payment. Read more.
Back to FAQs > Back to in an IVA FAQsCan I apply for credit in an IVA?
It is against the general terms and conditions of an IVA for you to apply for credit greater than £500, without the expressed permission of your Insolvency Practitioner.
This article outlines the restrictions against obtaining credit during your IVA. It also explains how a new creditor might find out about your IVA if you make an application for new credit. Read more.
Back to FAQs > Back to in an IVA FAQsAsk your own question
If you would like to ask a specific IVA question relating to your personal circumstances, or if you still have not found the IVA answers you were looking for then simply call 0800 088 7502 to speak to one of our IVA advisers or, alternatively, complete this form and one of our advisers will call you back at your preferred time.
