We have answered some of the most frequently asked questions about the wider implications of an IVA, covering aspects such as whether you have to tell your landlord, what to do with existing bank accounts and whether you can take out additional credit whilst in an IVA.
If you have a question which has not been answered below, you can post your question on the ClearDebt Community at the bottom of this page.
The questions can be categorised by the following:
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.
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.
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.
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).
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.
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. Read more in the FAQ on benefits of an IVA.
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.
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.
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.
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.
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.
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.
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