- Is an Individual Voluntary
Arrangement (IVA) right for me?
If you have significant debts with a number of creditors, an IVA could be
right for you, particularly if you're a homeowner and want to protect your property's equity. IVAs can also be an attractive alternative to bankruptcy because you won't face the stigma of a newspaper announcement, the administration costs are lower, and there's no risk to your home or professional status.
- What's the risk to my assets?
With an IVA, the risk to your property, savings and investments are less than with a bankruptcy. As you will be offering regular monthly payments, your creditors will not usually claim for equity from your home. However, they may require funds from such sources as savings, endowment policies, premiums bonds and ISAs.
- Will my IVA be made public?
No. Unlike bankruptcies, IVAs do not appear in the press. However, they are recorded on an IVA register at the Department of Trade and Industry (DTI).
- How much will I pay each month?
This depends on your disposable income, not the size of your debt. Your disposable income is your remaining money after you've paid reasonable monthly living expenses, excluding your debts. This figure is agreed between you, your insolvency practitioner and your creditors.
- What if I don't pay every month?
You should always try your best to meet your IVA commitments as your creditors may take action against you if you don't. However, if your circumstances change and you face brief financial difficulties, it's possible to arrange a break from paying. Any months you miss are normally added to the end of the IVA's five-year period. If you suffer more severe financial problems, your appointed insolvency practitioner can ask your creditors if they will agree to change the IVA. If, up to this time, you've paid without problem, your creditors are more likely to agree to this.
- Will it affect my credit rating?
Yes, because taking an IVA means you've fallen behind with your debt payments. With an IVA, you can't apply for further credit without your appointed insolvency practitioner giving you permission.
- What debts can I include in my IVA?
You can normally include any unsecured debts in your IVA. This rules out your mortgage, any loans secured on your home, and hire purchase debt. You can also include tax and VAT debts, which are usually repaid first.
- Will I lose my house?
No. However, if you have equity in your home, your insolvency practitioner will take this into account when offering an IVA to creditors. You may also need to release some of your home's equity during your IVA's five-year term.
- Will the IVA stop my creditors taking action against me?
Yes, providing you keep paying your agreed monthly sum.
- I'm considering an IVA but my creditors are taking me to court. What shall I do?
When your insolvency practitioner has prepared your proposal, they can apply to the county court for an 'Interim Order'. This stops your creditors starting bankruptcy proceedings against you. It also prevents other enforcement action without the court's permission. Better still, your insolvency practitioner can take care of this in around one week.
- Can I cancel the IVA once it's set up?
As an IVA is a legal process, you cannot cancel it if you change your mind. However, the IVA will fail if you do not comply with its terms. At this time, your creditors could take legal action against you.
- Can I arrange an IVA directly with my creditors?
No. The arrangement is a legally binding contract that requires a 'nominee' to handle your repayment proposal, and a 'supervisor' to take care of your IVA from there. Your insolvency practitioner will usually perform both roles.
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