IVA FAQ - Questions & Answers about Individual Voluntary Arrangements
Our most popular FAQ´s about IVA,
Individual Voluntary Arrangements can be found here.
If your question is not answered above go ahead and ask us using
the form at the bottom of the page.
Q: How long will
the IVA last?
A: Usually an IVA will last for 5 years (60 months), however it
can be any duration.
Q: Can creditors change their minds if the IVA has
been agreed?
A: No. Once the IVA arrangement has been agreed your creditors
are bound by the terms and, as long as you maintain your
obligations (ie, keep up the payments and tell your supervisor if
your circumstances change), they cannot take further action against
you or demand a higher repayment from you.
Q:
How much will the Individual Voluntary Arrangement monthly payments
be?
A: The IVA monthly payments should be as much as you can
reasonably afford after you have accounted for your basic living
costs and those of your dependants. The amount should be the most
that you can afford and that is achievable too - whatever you
propose should be viable for the duration of the proposed
Individual Voluntary Arrangement.
Q:
I am self-employed. Can I do an IVA and continue trading?
A: Yes you can, however IVAs for self employed people are
generally more complicated and often require more work on the part
of the Insolvency Practitioner. Once we have all of your
information we will be able to discuss this issue with you and look
at how this may alter the way that the IVA proposals are put
together.
Q: What is the
Cost of an Individual voluntary arrangement?
A: You do not pay anything other than your agreed, fixed monthly
contribution. An Individual Voluntary Arrangment can only be
prepared for you by a qualified licensed insolvency practitioner,
so there are inevitable professional fees . However, all fees are
paid for from the contributions you make and which are agreed by
your creditors.
ClearDebt keeps IVA costs low by collecting much of the required
information over the internet from you and by using tailor-made
automated procedures and specialist administrators to process
cases.
By keeping our fees low more of your contributions will go to
your creditors which means they are more likely to accept your IVA
proposal than might otherwise be the case.
ClearDebt only deals with IVAs. This means all our structures
are streamlined to eliminate unnecessary cost and wasted time.
In addition, ClearDebt relies mainly on the internet to
advertise our services and we do not spend large, wasteful amounts
on glossy advertising - we believe the quality of our service
speaks for itself.
ClearDebt earns IVA fees, like other IVA companies, in two
ways:
1) The ClearDebt Nominee's fee (the fee for putting together the
proposal and presenting it to your creditors) for a simple IVA
varies depending on the amount of your debt and number of your
creditors, and is set under a protocol fixed between the debt
resolution industry and the banks and credit card companies.
Protocol-compliant IVAs are generally where you are an employed
person with bank loans, store, and credit card debts. If you are a
sole trader, partner in a business or have complicated affairs our
fees may occasionally be higher - but we will explain the reasons
if they are higher than our standard - and they still won't alter
the payment you make.
2) The Supervisor's fee: ClearDebt charges up to a maximum of
15% of all contributions you make over the period of the IVA, taken
monthly, in fulfilment of the supervisory role.
Remember - these fees are included in the agreed amount that you
pay each month. There are no additional or hidden fees.
Q: When
is the best time to do an IVA?
A: The simple answer here is as soon as possible, for a number
of reasons.
Firstly, if you are able to put together proposals for the
settlement of your current debts before they get any larger, you
will be able to maximise the amount that can be repaid to
creditors.
Secondly, creditors are most likely to take a commercial view
when deciding whether or not to agree to the IVA proposals. If they
are likely to receive a higher dividend than they would in the
event of your bankruptcy, an IVA will be a more attractive
option.
Finally, creditors also want to see that you are taking every
opportunity to tackle your problems. You are certainly not alone in
experiencing significant financial problems, however a positive
approach to remedying the situation for the benefit of the
creditors will be appreciated much more than signs that you have
strung them along as long as possible and this is now your only
option.
Q:
What information do I need to arrange an IVA?
A: To arrange an IVA, your proposal for an Individual Voluntary
Arrangement (IVA) must be a full and true account of your
current financial situation.
You will need to provide:
- The name and contact details for all companies, organisations
and individuals that you owe money to - and the amount that is
owed.
- Details of your monthly income and spending (Cleardebt wants to
make sure we put forward an arrangement you can genuinely
afford).
- Information about your house, including its value and any
mortgage. You must state who your mortgage provider is and the
amount of your mortgage (unlike bankruptcy, you will not be forced
to sell your house in an IVA).
- Information about any loans that are secured on your home.
- Details of any assets of significant value, which may be of
interest to your creditors. (Unlike bankruptcy, it's up to you what
you decide to keep or to sell to meet your debts; but your
creditors may be more inclined to support your IVA arrangement if
you sell the Roller and buy a Ford instead.
Don't worry if you don't have all this information easily to
hand, our advisors will help you get it together - and, with your
permission, we can approach creditors on your behalf.
Q:
How long does it take to arrange an IVA?
A: No one IVA is the same and the time they can take varies.
However, the quicker that we receive information from you each time
it is requested, the more quickly we will be able to move. We want
you to get the certainty of an IVA as soon as you can.
ClearDebt is proud of the speed with which we work: We regularly
put IVAs in place in around four weeks, but six weeks would be more
typical.
A rough guide to time involved to arrange an IVA
- The ClearDebt Analyser: around 2 minutes
- Detailed Financial Healthcheck: between 15 mins to 1 hour
- (Use the checklists at the beginning to gather together
information you will need before starting to answer the
questions).
- Advice call - a detailed personal review of your situation with
one of our trained advisers - 30 - 40 mins.
- You will receive your Personalised ClearDebt report within 2
working days of completing the ClearDebt Financial Healthcheck and
having talked things over with one of our advisers.
Our report will ask you to send back confirmation of the details
you have provided together with credit card statements, payslips,
etc detailing this. You will also be asked to complete a small
number of simple additional questions - We will move your case
forward as soon as we receive this back from you.
Once ClearDebt has all the information we will arrange for you to
have a telephone discussion with your Insolvency Practitioner (or
suitably qualified representative) - so you understand fully your
rights and responsibilities, how the IVA will work and how the IVA
will affect you. Before you actually meet ClearDebt you will be
sent a copy of the draft IVA proposal for you to review and comment
on.
Once you are happy with your IVA proposal and after you signed and
returned the IVA proposal, the documentation will be sent by
ClearDebt to the creditors and the court (this is merely a
formality unless an interim order is required.).
There will be a minimum of 14 days and a maximum of 28 days
between the documentation being circulated and a meeting of
creditors being held. It is at this meeting that the creditors
decide whether or not they agree to your IVA proposal. The
arrangement is passed if 75% of your creditors, (measured by the
value of their debt) who vote agree.
Q:
What will happen to my home in an IVA?
A: Your home may or may not be included in the IVA proposal.
This will determined by your circumstances.
If you do not have more than £5,000 of equity in your home (the
amount left after your mortgage and other secured creditors have
been paid when the house is sold) then it is unlikely the house
will be included in your IVA.
However, if you have a large amount of equity, your creditors
may ask for part of your share of it to be included. If you own
your property jointly, with your wife for example, then your share
would be half of any equity.
You would normally arrange to contribute your share by
re-mortgaging your property during the course of the IVA, usually
near the end. The amount raised will never be more than the
remainder of the debt you owe and will never be more than 85% of
your share of the equity. If there is no equity, or you can't get a
re-mortgage, you may be asked to make up to a year's further
contributions - but never more.
A further advantage of an IVA is that you will have a number of
years to arrange this whereas in bankruptcy you would be allowed a
maximum of 12 months to do so - before being forced to sell your
home to make the contribution.
Q:
What will happen to my assets in an IVA?
A: You must disclose all of your liabilities (debts) and assets
to the insolvency practitioner (IP) acting as your nominee.
Your personal belongings, including cars, computers, jewellery,
etc are most unlikely to be taken from you in an IVA.
However, if you have an asset, such as a valuable antique, or a
luxury car, you may be strongly advised to include this as part of
the offer that you make to your creditors. There are a number of
reasons for this:
1) If you were made bankrupt, such an item would automatically
be required to be sold by the Official Receiver. Creditors are
unlikely to approve your IVA unless it gives them a better return
than in bankruptcy. If valuable assets are excluded from the IVA
then this might not be possible.
2) You are legally required to make a full and honest disclosure
of all your assets. If a creditor sees that you have a luxury item
that you are not prepared to include and do not have a good reason
(for example sentimental value ) then they may not support such a
proposal.
Remember if you do not tell your creditors that you have a
valuable asset when they agree your IVA they could ask the Court to
cancel it subsequently.
However, everybody's circumstances are different. If you are at
all concerned about this issue, one of our advisors will be happy
to give you more information.
Ask a ClearDebt advisor via http://ask.cleardebt.co.uk and you
will receive a prompt reply or call us on the freephone number
displayed at the top of the page.
Q: What happens if I have a secured loan or mortgage
and then enter into an IVA?
A: You may have loans other than your mortgage that are secured
on your home. The most common will be "homeowner loans" or " debt
consolidation loans" which you may have used to pay off other debts
in full, in exchange for one monthly payment.
These loans may seem a solution to the demands of lots of
different creditors requiring monthly payment - but your house is
at risk if you are unable to keep up with your monthly repayments.
This could prove challenging and stressful if you aren't quite
making ends meet every month.
The "security" that the loan company takes over your property is
like the mortgage that you will have with your bank or building
society. The loan company has a legal guarantee that ensures that,
in the event you do not make the required payments, they can demand
you sell your house to pay back the loan. So, they are unlikely to
agree to compromise this by agreeing to an IVA. Put simply, in
almost all cases, an IVA will not involve large secured debts.
If you have a secured loan and you have also built up a number
of other debts you cannot pay on time or in full, you may be able
to put an IVA together that deals with the unsecured debts. You
will need to keep making the monthly payments on your secured loan
whilst also making your monthly IVA contributions if you want to
keep your home.
Have a query that is
not answered?
Please ask via the form below. Qualified advisors are on standby
to assist.
