Your IVA Questions Answered in the IVA FAQ

IVA how, what, whyHere are the answers to some of the most frequently asked IVA questions. Click on each link below to go straight to the question or scroll down to browse the FAQs.  If you have a question about IVAs which hasn't been answered here, visit the ClearDebt Community to post your questions for the ClearDebt team

 

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 and your credit rating will be affected for 6 years.

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 IVA 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 will not 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 debt 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 Contact form: 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 qualified debt 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 in your IVA proposal 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 phone 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.

 

Additional IVA Questions - What, Why and How?

Please read our full guide of questions and answers below which highlight what you should know about an IVA.  If you have any further questions though, please let us know by emailing:

enquiries@cleardebt.co.uk

info - Facts you need to know about how an IVA works

Tick- Benefits that will help ease the current pressures you may be feeling whilst trying to pay back your debt

warning- Be aware of important issues which may affect your relationship with creditors, pending court action, your credit rating and lifestyle.

 

infoHow much debt do I need to qualify for an IVA?

You need a minimum debt level of £10,000 and two creditors (most other IVA providers insist that you must owe at least £15,000) to be considered for an IVA.  There are other criteria you will also need to meet.  To get a better idea of this and to find out if it fits your circumstance, please see our guide here.

 

info How long does it normally take for an IVA application to take place, from initial call to proposal accepted?

In most cases, we average four - seven weeks.  There have been occasions where we have done this in as little as three weeks, but that is rare.

 

infoHow much will I have to pay into the IVA each month?

Monthly payments depend on your net disposable income rather than the size of debt. This is considered to be the amount you have left after essential monthly living expenses (excluding your debts) are taken from your monthly take home pay and adding that to any benefits that you might receive. This figure will depend on your personal circumstances and will be agreed between you and your advisor. Normally the monthly payment will not be below £200.

 

info What is the minimum number of creditors required for an IVA?

Two - but with at least three lines of credit. An overdraft and credit card with the same bank are normally considered to be a single creditor, despite being two debts, so in this or a similar scenario you would need another separate creditor.

It's important to be aware that many creditors operate under several brand names. For example, the Cahoot brand is part of Santander.

 

info In terms of percentage of total debt, how many creditors need to attend the creditors meeting?

Only one.  However, usually creditors do not attend the meeting, they vote by proxy, (meaning they register their vote without being there). Only one proxy is therefore required.

A proxy is a person or agent nominated to act on behalf of an organisation. 75% by value of the creditors registering to vote will need to vote in favour for the IVA to pass. More than nine out of ten of the IVAs we propose are passed.

 

Tick Is it really true an IVA will guarantee to write off up to 70% of my debts?

It can - this depends entirely on our assessment of your ability to repay. More typically we cut people's debts in half (if they complete the IVA). We do achieve a 70% write-off (or better) in around one in five cases. You must keep to the terms of the arrangement and all your debts must be included in the proposal. Unlike debt management schemes, an IVA is a once and for all settlement of your debts (excluding mortgages and secured loans).

The IVA application involves our team working out with you exactly what you can afford to contribute in one monthly payment to us, after your essential expenditure has been taken into account.  We then distribute this payment to your creditors.

It's vital you include all your debts in the proposal. Any excluded creditors could challenge the validity of the arrangement if they believe that there has been unfair prejudice. However if you have inadvertently missed a creditor off your list, that creditor will still be bound by the IVA (unless they were owed 25% or more and wanted to vote against your proposal).

Once the arrangement is successfully finished, your debts are written off permanently.

 

infoAre there any fees in setting up and maintaining an IVA?

Fees are charged for setting up and supervising the IVA however, these costs are integrated into your monthly IVA payments and are not additional. A fuller explanation of these fees and what they cover is explained here: IVA Fees

We do not charge for our initial advice and our fees only come into effect once your IVA has been passed successfully.

If we propose an IVA which is rejected, then we bear the cost. You are not charged a penny. We have a very high acceptance rate (97%) and would not propose an IVA if we thought it would not be approved. However, if the IVA fails because you pull out after you have agreed the proposal we created for you, then you can be charged a fee.

 

TickDoes an IVA guarantee freedom of debt in five years?

We can't guarantee you will be debt free in five years, but if you're not, you will be very close to it.  On rare occasions it can take an extra year but five years is standard practice for most IVAs.  Changes to the timings of your completion date can sometimes come into effect if you are unable to make your monthly contributions for a while due to a change in personal circumstance.  It's also important to note that although you will be debt free at the end of your IVA, your credit rating will still be affected for another year.

 

warningDoes my credit rating improve when entering into an IVA?

No. Whilst waiting for your IVA proposal to be accepted by your creditors, we do advise you continue to make contributions, even if you cannot afford the minimum monthly payment. Failure to do this can seriously affect your credit rating.

Once the IVA proposal is accepted, your creditors notify the credit reference agencies so that it will be noted on your credit file that you are now in an IVA.  This information stays on your credit file for an average of 6 years from the commencement of your IVA.

When you successfully complete your IVA, you will be free from debt, but you will not have a clean credit record until about one year later. Your IVA Supervisor will provide you with a Certificate of Completion which you are able to show anyone you wish to which will confirm that you have successfully completed your arrangement.  In addition to this, your IVA Supervisor will also send a copy of your Certificate of Completion to your creditors so they can update their systems and then notify the credit reference agencies.  Many clients do however prefer to send a copy of their certificate to the credit reference agencies themselves, to help speed up the process.

 

info Once submitted to my creditors, is my IVA proposal guaranteed to be accepted.

Unfortunately not.  Your creditors will determine whether or not they are happy with the proposal and the suggested amount you feel you can contribute on a monthly basis.

One creditor can stop the IVA if they are owed more than 25% of your total debts. If more that 75% of your creditors by value, approve the IVA, then any dissenting creditors are bound by the arrangement.

 

Tick My debts are so high that with the interest on top, it's getting out of control - does an IVA guarantee to freeze all interest on my debt?

Yes.  One of the key advantages of an IVA is that it binds your creditors, legally, to freeze all future interest on your debt.  This means your debt level will not increase more than the amount you start your IVA on.  The only exception to this rule would be if you are unable to make or keep up with your contribution. If this does happen, through no fault of your own, we are often able to agree a possible variation with your creditors.

 

info Are some creditors less likely to approve an IVA than others?

During late 2006 and early 2007, there was growing resistance to IVAs from some creditors which was blocking many fair proposals. It was their view that some IVA providers were misleading consumers about the suitability of IVAs.

This issue was resolved in February 2008 when a code of conduct was agreed between the IVA providers and the bodies who regulate them. This became known as the IVA Protocol.

The vast majority of creditors are now fully supportive of IVAs and with minor exceptions will, in the majority of cases, vote in favour of a well constructed proposal based on affordability.

 

warningCan I do an IVA without affecting my Property/House?

In some circumstances your home may be excluded from the arrangement. However, if you have equity (your net interest) in your house, this will be taken into account when making an offer to creditors. You may have to release some of this interest in your property (up to 85% of your share of the net interest and never more than the total you owe) at some stage during the IVA (normally during the 5th year of your IVA).  At this time, you may be expected to re-mortgage to raise money to pay into your IVA.

Your creditors are only going to approve an IVA if they consider they will get more money back than in bankruptcy. If the net interest in your property is more than your unsecured debts, then they could get it all back by bankrupting you, and forcing you to sell your home.

Usually, the net interest is released such that increased mortgage payments once the IVA is completed are no higher than the IVA payments were.

How your homeowner status affects your IVA proposal is complex and depends on many factors such as:

  • Your current mortgage repayments.
  • How much of the property is yours in the case of joint ownership.
  • The amount of equity (your net interest) in the property.

 

warningCan I cancel the IVA once it is set up?

An IVA can be cancelled or terminated if you fail to honour your obligations therein and failing to rectify any breach.  Once your Supervisor confirms you are in breach and has given you a period of time to rectify such breach AND you have failed to rectify, your Supervisor will terminate your arrangement and notify you and your creditors that your arrangement has been terminated.

 

infoWhat happens if the IVA is not approved?

If your IVA proposal is not approved, we will always look at possible changes to its structure and contribution suggestions.  If, after doing this, there is no room for manoeuvre, a member of our team will speak with you and see if there is an alternative solution such as a Debt Management Plan, which may at least suit you for the short term if not longer.   Many clients who are not applicable for an IVA opt for this solution until their situation changes than an IVA may be reconsidered.

Should neither solution be suitable for you (An IVA or Debt Management Solution), we will discuss alternative options, which may include declaring yourself bankrupt or looking into the feasibility of a Debt Relief Order.

 

TickWhich debts can be included in an IVA?

Normally, all unsecured debts can be included within an IVA. This includes overdrafts with your current bank and credit card balances.

In short, any service that you are no longer using, for which money is outstanding, has the potential for inclusion in an IVA proposal. For example, an outstanding bill for a disconnected mobile phone.

Personal debts for unpaid Income Tax and VAT can also be included.

 

warningWhich debts cannot be included in an IVA?

Secured loans and items on Hire Purchase can't be included as part of an IVA.

The following debts cannot be included, but "provisions" can be made within the IVA proposal. By provisions we mean, the fact that they are outstanding and must be paid is taken into account when calculating the amount you have available to make an offer to repay your creditors:

  • Council Tax Arrears
  • Any fine or penalties imposed by a court
  • Any liabilities arising under an order made in a family or domestic court action such as CSA claims for child support.
  • Any liabilities arising under a confiscation order made under S.1 of the Drug Trafficking Act 1986 0r S.71 of the Criminal Justice Act 1988.
  • Most educational loans, taken out after June 2004, as they fall outside of the Insolvency Act 1986.

 

info How are debts with joint liability treated with respect to an IVA, when only one of the debtors is applying for the IVA?

There is no simple answer to this. It is at the discretion of the creditors and dependent upon individual circumstances. The creditor involved will still be able to pursue the other party if they do not choose to enter into an IVA.

 

warning If I come into extra money by either a windfall, or a pay increase, do I have to increase my IVA contributions?

IVAs do have what is called a 'windfall' clause. Each year your IVA is reviewed. If you come into some extra money, for example, inheritance or improved salary, then this is taken into account and you could be required to make increased payments.

Failing to inform us of available funds is an offence. Typically you would be expected to pay the majority of any windfall, up to the total you owe and up to 50% of any salary rises or bonuses into the IVA.

In some cases, a windfall can enable you to complete your IVA in a much quicker period of time.

 

info How many IVAs fail due to the debtor not maintaining payments?

Our own records show an average failure rate of 10-15%, this is not the percentage of proposals that fail to be accepted, but the number of IVAs that are in place where the debtor defaults on the agreement and alternative payments are not agreed.

 

Tick I live in rented property, will my landlord find out about my IVA?

No.  Despite this because your situation is financially sensitive, we do advise being honest with your landlord and explaining the situation to him/her.  Should this raise any concerns, with your permission, we will be happy to speak with them and offer reassurance that your rent has been budgeted for within your IVA.

 

info My spouse/partner has no debts but a good income. Will they have to contribute to my IVA?

Your creditors will expect your partner to pay a proportion of the household expenses in the same ratio as your respective level of incomes, so that what's left over is also in proportion to this.

For example, if you earn 50% more than your partner and from your combined income, £800 is left over from the household budget each month, then you would be expected to pay £480 into the IVA and your partner gets to keep £320.

 

warning Are the terms of an IVA always fixed for the duration of the IVA?

No. Anyone in an IVA will be subject to an annual review conducted by the IVA Supervisor. If your circumstances change during the IVA, the terms of the IVA may be altered to take these changes into account. For example, an increase in income may result in IVA payments having to increase.

Typically 50% of any extra income not included in the original IVA proposal will be required to be paid into the IVA. This will depend on personal circumstances; an example of this is the break up of a marriage which often impacts on household income.  These situations must be taken into account when reviewing your IVA structure and contributions.

 

Tick Can I obtain an IVA if a bankruptcy order has been made against me or if any of my creditors are taking court action against me?

Yes, as long as you have not been discharged from bankruptcy. It is possible to annul a bankruptcy and enter into an IVA if it is more appropriate.

Also once the IVA is in place, you are protected from further recovery action by the creditors scheduled in the IVA and court action will be dropped.

 

warning Can I keep using my credit cards or take out a new loan during an IVA?

No.  During the IVA you will not be able to use any store or credit cards. You will also not normally be allowed to borrow more money. It may however be possible to change an existing mortgage while you are in an IVA. This must be under the supervision of your Insolvency Practitioner (us).

 

infoDo I have to meet the Insolvency Practitioner?

You don't have to, but we understand entering into an IVA is a big step and that many of our clients want to meet the people who are dealing with their affairs. We will always offer the opportunity for you to meet one of our representatives should you wish to but this isn't essential to creating and managing the IVA. We can as an alternative, arrange for you to meet a specialist in the area you live or simply have a telephone call with one of our IP's or a member of his/her staff.

 

TickAre you regulated?

Our Insolvency Practitioners are licensed by and regulated by the Association of Chartered Certified Accountants.

All Licensed Insolvency Practitioners are regulated by either the:

• The Institute of Chartered Accountants in England & Wales (ICAEW)

• The Insolvency Practitioners Association (IPA)

• The Law Society of England and Wales (LS)

• The Institute of Chartered Accountants of Scotland (ICAS)

• The Association of Chartered Certified Accountants (ACCA)

• The Institute of Chartered Accountants in Ireland (ICAI)

• The Law Society of Scotland (LSS)

• The Department for Business Innovation & Skills (BISS)

Licensed Insolvency Practitioners are monitored regularly by their professional bodies.  This ensures that they are complying with the law and ensures high standards are maintained.

 

info Does the Insolvency Practitioner (i.e. ourselves) represent the Creditor or the Debtor?

The role of the Insolvency Practitioner changes through the processes and at each stage of advice. The initial advice to you is where he/she acts for you. When he/she helps you in drafting the Proposal he/she starts acting as your Nominee and he/she has to ensure that your interest and those of your creditors are treated equally. Once approved and when acting as your Supervisor he/she acts in the interests of Creditors to ensure that you keep to your obligations.

 

TickWill you help me deal with my creditors if I'm in an IVA - they keep calling me and writing letters - I'm feeling very harassed and helpless to do anything about it?

Yes - absolutely.  We understand how stressful dealing with creditors can be if you are in debt to them.  We will help handle any creditor relations we can on your behalf to help relieve any pressures for you.

We can also reassure you that once the IVA is in place creditors and debt collectors can't legally pursue other routes to debt repayment from you.

 

info If I enter into an IVA, will I be able to hold a position of public office e.g. Company Director?

Unlike Bankruptcy, an IVA does not legally restrict your ability to hold positions such as a Justice of the Peace or Governor of a School. However, there could be restrictions in the case of a Company Director depending on what the Company's Articles of Association states. It can also be the case that it is written into someone's terms of employment that entering into an IVA results in dismissal, particularly if they worked in the area of insolvency.

 

TickCan I stay in business?

Yes, you can. IVAs have helped thousands of sole traders or partners remain in business when faced with severe financial problems.

If you own a company or are a director of a limited company, you can retain your position when in an IVA, which is not the case if you were made bankrupt.

 

warningWill I have to close my bank account?

If you have debts with your bank, they can take money from where your wages are paid into, whether you can afford it or not. This is called the Right of Offset. Such debts can be in the form of an overdraft, credit card balance or personal loan.

Therefore we do advise you arrange new banking facilities before embarking into an IVA if your current bank holds some of the debt that is to be placed in the IVA.  Many of our clients use a ClearCash Prepaid MasterCard for this purpose.

People entering into an IVA normally already have some adverse credit history and find it difficult in getting an application to open a conventional bank accepted. In that case you need to open a non-credit bearing basic account, or a Prepaid card which does not run applications based on credit checks.

As an IVA is a private matter, your new bank/finance facility does not need to know about your IVA. We can advise you further on this matter.

 

Tick Can I enter into an IVA if I have already received a Statutory Demand?

Yes, although we recommend that you contact us as soon as possible. We would apply to the Court for an "Interim Order", which is a request to suspend all legal action until the result of the creditors meeting is known.

 

warningWhat if I fail to keep up the agreement?

If you fall into difficulty and are unable to make the payments to your IVA, it may be possible to agree a payment holiday with your creditors via ourselves. The months which you miss will normally be added to the end of the agreement.

If during the period of your IVA, your circumstances change for the worse, perhaps you change your job and earn less money, you may find that you cannot maintain the agreed payments. In these circumstances, we can ask your creditors to vary the terms of your IVA. If up until that time, you have maintained your payments without problem, your creditors will often accept such changes.

Please note, if you are unable to re-start your payments at all, it is likely that the IVA will fail. Your creditors will then be able to take other action against you and alternative arrangements must be made. It's also worth noting that the failure of an IVA can result in Bankruptcy.

 

TickCan my arrangement be brought to an early conclusion?

Yes, a meeting of your creditors can be convened to offer a sum of money in a full and final settlement of your obligations under the IVA. The sum of money could be raised by:

  • Re-mortgaging your property
  • Funds from a relative or other third party
  • Cashing in life insurance policies (subject to you obtaining expert investment advice)

Creditors are likely to agree to accept a lump sum to bring the arrangement to an early end if you can show that you are paying creditors as much as you can afford.

 

infoHow will the monthly IVA payments be made?

A standing order will be set up, usually from your new bank account (see above) to an account held by us that will be used to collect and monitor your IVA payments.

 

warningCan I arrange an IVA directly with my creditors?

No. The arrangement takes the form of a contract that is legally binding. One of the key components of this is that your proposal of repayment is handled by a Nominee and the ongoing maintenance of the payment schedule is the responsibility of a Supervisor (both offices must be held by a licensed Insolvency Practitioner). In most cases the same Insolvency Practitioner will fulfil both of these roles.

 

TickWhat happens at the end of the agreement?

As long as the terms of the proposals have been fully carried out, your creditors will have no further claim against you and the balance of any unpaid debts is written off. You will be provided with documentation to confirm that you have satisfactorily completed the IVA and a report will be sent to your creditors.

 

warning Why would a creditor allow me to write off a proportion of the money I owe and accept an IVA proposal?

Should you go bankrupt, it's unlikely a creditor will receive any of the money owed to him.  Although an IVA does not give a creditor a full return on the debt owed, it does guarantees a percentage back therefore making it a more favourable option.

 

TickDo I have to tell my Partner or Spouse?

If none of the debts are jointly in your partner's name, then you don't have to tell them.

However, one factor determining how much you must pay into the IVA is your own living expenses, which is influenced by the total household income; Therefore you will be asked to state partner's income and contribution to household expenses.

Despite it not being a requirement of the IVA to tell your partner, we do recommend that you do this.  Adapting your life to manage your IVA payments successfully and budget accordingly takes commitment.  For many people this can be a drastic change of lifestyle and they will need the support of their partner and family to make this a success.

 

Tick If I enter into an IVA does that mean that I won't have to go bankrupt?

It does, however, should you miss payments this will have to be reported to your creditors and they will then decide what action to take.

This will affect your ability to get credit once the IVA is completed.

 

warningCan anyone with debts apply for an IVA?

No, you must be technically insolvent. There are two basic tests of insolvency:

  • Your liabilities (debts) are greater than your assets
  • You are unable to pay your debts as they fall due for payment

If both these conditions apply to you, then seek professional advice as an IVA may save you from Bankruptcy.

If only the second point applies, then an informal debt management plan or a home equity release could be the most appropriate course of action to reduce your current debt repayment levels.

 

infoHow does an IVA impact my personal pension?

The asset that is your personal pension is not at risk in an IVA. However, you may be required to reduce or suspend payments into it for the duration of the IVA with the intention of using this money towards the IVA.

Income received from either a state or other pension schemes are considered as income when calculating how much you can afford to pay into an IVA.

If you have made excessive contributions into a personal pension plan, just before applying for an IVA, then this may be considered to be an attempt to hide money from your creditors. In the case of bankruptcy, this transaction could be reversed by court order and the money taken to be paid towards your debts. Your creditors would require the same in order to approve the IVA proposal, after all an IVA is intended to produce more for the creditors than bankruptcy.

 

info I'm considering an IVA, but my creditors are taking me to court. Can this be stopped?

When the IVA proposal is prepared, the court is notified. This is usually sufficient to stop proceedings. If not, your Advisor or Nominee will write to the court and the creditors concerned on your behalf. Further steps can be taken if necessary.

 

warningCan I keep my car while on an IVA?

It depends on the car and your circumstances. This is the case for all high value assets. It is normal to be allowed to keep a car worth a reasonable amount, especially if needed for work or family commitments. The conditions are not as strict as with bankruptcy.

For cars on Hire Purchase, this debt is secured and therefore can't be included in the IVA, the HP company will simply repossess the car if your do not maintain payments.

Normally you will be allow to keep making HP repayments while on the IVA, however once payments are completed, you will be expected to make increased payment into the IVA now that your outgoings are lowered.

It may be the case that you decide to cut your losses and return the car to the finance company. In this case the outstanding balance is not longer secured and can be included in an IVA proposal.

 

info Once I decide upon an IVA, is interest and other charges frozen at that point?

No. There is no agreement in place with the creditors until the IVA proposal has been formally approved.  Charges are only frozen once the IVA is officially in place.  Until that point, creditors have every right to add charges and allow interest to accrue as the IVA proposal may not be accepted.

 

warning How are my savings accounts or endowment policies impacted by an IVA?

You must release money from saving accounts and endowment policies to pay towards your debts, otherwise your creditors will not accept the IVA proposal.

 

infoWho can I speak to if I wish to complain?

We take complaints and customer service issues very seriously and will do all we can to resolve any issues you may have with any of our services. Should you feel the need to complain about our company, you will find all the information you need to do so here: ClearDebt Complaints Procedure

If you are not satisfied with our response to your complaint, you may take it to our trade association (the Debt Resolution Forum and/or to the Financial Ombudsman Service. Details of how to use either of these procedures can also be found at the link above.

Should you wish to complain about our Licensed Insolvency Practitioners or the conduct of your IVA, you should still use our internal complaints procedure but, should you feel your complaint is unresolved, you should complain to the professional body responsible for the insolvency practitioner's licence - ACCA (the Association of Chartered Certified Accountants).

 

warningHow long must there be between IVA proposals?

This often depends on the reason the IVA was rejected or terminated.  If it was rejected due to "red tape" issues such as timings, we may be able to make a new application for you straight away.  However, if the rejection is more to do with the short time you have had your debt, creditors may stipulate that you must wait until the debt is 12 months old before re applying.  Furthermore, if it emerged that the IVA failed due to your dishonestly, this may prejudice future IVA attempts either at creditor meetings or by getting an IVA company to represent you again

 

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