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IVA Information / advice

Thursday, 3rd March 2011

2012-iva-informationIVA information / advice - Questions and answers

Below we have compiled a list of the most frequently asked questions together with the answers.

How much do I pay a month into an IVA?

In order to determine how much you can afford to pay per month there needs to be a sufficient full assessment of your circumstances, this will include your income and expenditure.  Once this has been completed you will have an indication of how much a month you would be expected to pay into an IVA. Alternatively creditors may accept a one-off lump sum payment, such as a re mortgage, or a sum of money from a third party, this could be a family member, in full and final settlement.

You may wish to see our free budget form to help get an idea what you can afford each month. You add your regular reasonable expenditure and then deduct this amount from your net income per month, this will give a rough figure of what you may be able to afford to pay per month into the Voluntary Arrangement. Remember the budget form is a guide only and you will still need to have a full assessment to confirm what you can really afford to pay each month.

How do my creditors say yes or no to my IVA proposal?

Creditors will have been sent forms for voting on whether to accept or reject the proposals put forward. Your creditors may submit their votes by post or in person on the day of the meeting. Creditors do not usually attend the meeting.

Where does the IVA creditors’ meeting take place?

It is normally held at the office of the appointed firm that prepared the proposal for you. In some instances the meeting may well be held at a place convenient to the majority of your creditors. In the majority of cases you do NOT have to attend as creditors usually vote by post and facsimile.

Can creditors change their mind at a later date and demand more in my IVA?

Section 262 of the Insolvency Act 1986 allows creditors 28 days from the date that the Chairman’s report is filed in Court to appeal against the decision to approve the debtor’s proposal. For their appeal to be successful, the creditor will need to satisfy the Court that there has been a material irregularity or that they have been unfairly prejudiced. . Providing no such appeal is lodged, you cannot simply appeal because they are unhappy with the outcome, once the proposal achieves a 75% majority (in value) in favour, by those creditors participating in the voting, either in person or by proxy, then the IVA is approved. The proposal is binding on all creditors who were notified and entitled to vote.

Am I bankrupt if I enter into an IVA?

No. The stigma of Bankruptcy is avoided by entering into a Voluntary Arrangement.

Is there any publicity with an IVA?

There is no press advertisement; however the Department of Trade & Industry does keep a register of everyone who has entered into a Voluntary Arrangement. This register is open to the public.

Have I legally discharged all my unsecured debts?

Yes, provided they are included in the proposal and the arrangement is completed satisfactorily.

What is my position regarding further credit after completion of the IVA?

This is a very open ended question, and is entirely up to the lender. On completion of the arrangement your debts are deemed to have been paid in full therefore you should not have a problem getting credit. But having said that if a major credit card were one of the creditors in your Voluntary Arrangement it is most likely they would not extend you credit again. The IVA should be recorded on your credit file for 6 years from the date of commencement.

What happens if I die during the term of the IVA?

Some proposals incorporate a clause that Life Assurance is obtained to cover the event of death, with premiums met from your payments into the plan.

Do creditors still charge interest on my liabilities in the IVA?

No, interest is usually frozen from the date the IVA is approved by creditors.

Can I end my IVA early; does it have to be for 5 years?

Most insolvency firms in the UK use the standard terms and conditions therefore one would expect there to be provision for you to request another creditors meeting at any time during your IVA so as to enable you to put forward an offer to your creditors to end the arrangement early.

For example; say you pay £300 per month for a period of 5 years into the IVA and have been doing so for 2 years. A family member, friend or third party has offered to lend you a lump sum to end the IVA. You have 36 months at £300 per month remaining to pay into the IVA, this equates to £10,800.

There is no golden rule to adhere to here as to how much to offer and after what period of time since the IVA was approved, you can offer what you like and when you like. You will need to contact your IVA Supervisor who explain this in more detail.

Debts not covered by an IVA

An IVA cannot affect the rights of secured creditors i.e. mortgages or preferential creditors such as the Inland Revenue except with their agreement. They can however be classed as a contingent creditor. The IVA can include a mortgage shortfall debt; this is the debt the mortgage lender is claiming after a house has been repossessed.

Do I qualify for an IVA?

Creditors usually look for a higher level of unsecured borrowing typically £15,000 and upwards and with multiple creditors as below that figure there may well be other more suitable options for both the debtor/borrower and lender. In some circumstances, such as a bankruptcy petition against the debtor, the debtor may wish to deal with the petition or overturn a bankruptcy by proposing an IVA. In this instance there is really no level of debt to bar the IVA.

You will need to be able to fund the IVA either by;

  • Monthly contributions.
  • Monthly contributions and a lump sum.
  • Or a lump sum only.

In any event the IVA will need to offer more to creditors than what they would expect to receive in a bankruptcy scenario.

When not to propose an IVA

  • If you have reasonable equity in your home then creditors may well look for your share as well as any endowment policies and savings plans.
  • If your creditors require you to pay 100 pence in the pound then this is payment in full, you then stand the risk of paying interest on your liabilities. More importantly the firm handling the IVA will still need to be paid their fees as well, commonly known as Nominee and Supervisor’s fees.
  • When you are NOT insolvent.

Don't rush into an IVA; explore all your options, take professional advice from more than one specialist.

Can DebtWizard help decide if an IVA is right for me?

To find out more then telephone Debtwizard.com

  • 03339 870 180 (Mon toThu 9.00am - 8.00pm, Friday 9.00am - 6.00pm)
  • Or complete the rapid debt help form and we will call at a time that suits you

Need more information about Individual Voluntary Arrangements (IVAs)?

If you need more information and advice about IVAs in general then have a look at the links below.  If you have a question then see if we can answer it and help you at our much acclaimed The DebtWizard Debt Help Forum & IVA Forum

Take me to - IVA Pros and Cons

Take me to - IVA Fees

Take me to - IVA Information

Take me to - What is an Individual Voluntary Arrangement, IVA?

Take me to - IVA v Bankruptcy, the answers to questions that most worry consumers

Back to the main Individual Voluntary Arrangement (IVA) page

 

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