Your IVA Questions Answered in the IVA FAQ
Here 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
- How long will the IVA
last?
-
Can creditors change their minds if the IVA has been
agreed?
-
How much will the Individual Voluntary Arrangement monthly payments
be?
-
I am self-employed. Can I do an IVA and continue trading?
- What
is the cost of an Individual Voluntary Arrangement?
- When is the
best time to do an IVA?
- What
information do I need to arrange an IVA?
- How long
does it take to arrange an IVA?
- What will
happen to my home in an IVA?
- What will
happen to my assets in an IVA?
-
What happens if I have a secured loan or mortgage and then enter
into an IVA?
- How
much debt do I need to qualify for an IVA?
-
How long does it normally take for an IVA application to take
place, from initial call to proposal accepted?
-
How much will I have to pay into the IVA each month?
-
What is the minimum number of creditors required for an
IVA?
-
In terms of percentage of total debt, how many creditors need to
attend the creditors meeting?
-
Is it really true an IVA will guarantee to write off up to 70% of
my debts?
-
Are there any fees in setting up and maintaining an IVA?
-
Does an IVA guarantee freedom of debt in five years?
-
Does my credit rating improve when entering into an IVA?
-
Once submitted to my creditors, is my IVA proposal guaranteed to be
accepted?
-
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?
-
Are some creditors less likely to approve an IVA than
others?
-
Can I do an IVA without affecting my Property/House?
- Can I
cancel the IVA once it is set up?
- What
happens if the IVA is not approved?
- Which
debts can be included in an IVA?
- Which
debts cannot be included in an IVA?
-
How are debts with joint liability treated with respect to an IVA,
when only one of the debtors is applying for the IVA?
-
If I come into extra money by either a windfall, or a pay increase,
do I have to increase my IVA contributions?
-
How many IVAs fail due to the debtor not maintaining
payments?
-
I live in rented property, will my landlord find out about my
IVA?
-
My spouse/partner has no debts but a good income. Will they have to
contribute to my IVA?
-
Are the terms of an IVA always fixed for the duration of the
IVA?
-
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?
-
Can I keep using my credit cards or take out a new loan during an
IVA?
- Do
I have to meet the Insolvency Practitioner?
- Are you regulated?
-
Does the Insolvency Practitioner represent the Creditor or the
Debtor?
-
Will you help me deal with my creditors if I'm in an IVA?
-
If I enter into an IVA, will I be able to hold a position of public
office e.g. Company Director?
- Can I stay in
business?
- Will I have
to close my bank account?
-
Can I enter into an IVA if I have already received a Statutory
Demand?
- What if I
fail to keep up the agreement?
-
Can my arrangement be brought to an early conclusion?
- How
will the monthly IVA payments be made?
-
Can I arrange an IVA directly with my creditors?
- What
happens at the end of the agreement?
-
Why would a creditor allow me to write off a proportion of the
money I owe and accept an IVA proposal?
- Do I have
to tell my Partner or Spouse?
-
If I enter into an IVA does that mean that I won't have to go
bankrupt?
- Can anyone
with debts apply for an IVA?
- How
does an IVA impact my personal pension?
-
I'm considering an IVA, but my creditors are taking me to court.
Can this be stopped?
- Can I keep my
car while on an IVA?
-
Once I decide upon an IVA, is interest and other charges frozen at
that point?
-
How are my savings accounts or endowment policies impacted by an
IVA?
- Who can
I speak to if I wish to complain?
- How
long must there be between IVA proposals?
- I have a question that is not
answered!
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
- Facts you need to know about how an IVA works
- Benefits that will help ease the current pressures
you may be feeling whilst trying to pay back your debt
- Be aware of important issues which may affect your
relationship with creditors, pending court action, your credit
rating and lifestyle.
How
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.
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.
How
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.
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.
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.
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.
Are
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.
Does
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.
Does
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.
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.
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.
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.
Can
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.
Can 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.
What 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.
Which 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.
Which 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.
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.
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.
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.
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.
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.
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.
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.
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).
Do 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.
Are 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.
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.
Will
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.
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.
Can 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.
Will 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.
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.
What 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.
Can
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.
How 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.
Can 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.
What 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.
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.
Do 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.
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.
Can 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.
How 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.
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.
Can 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.
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.
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.
Who 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).
How 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
Have a query that is
not answered?

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