IVA Questions

IVA Questions - All Your IVA Questions Answered

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IVA Questions - What is An IVA?

An IVA is an 'Individual Voluntary Arrangement'. It is a legal agreement between you and your creditors, whereby you make regular monthly payments, usually for a five year period. At the end of this period any remaining debt is usually written off.

Are IVAs an easy way to wipe out my debts and start again?

IVAs are a serious step, so 'easy' probably isn't the right word. It is a relatively straightforward process with a good IVA provider, but you should only consider it if you are in really serious debt. They are right for some people, but you need to make sure an IVA is the right choice for you before committing to one. Don't think about it unless your debts are at least £15,000.

What is the Difference Between an IVA and Bankruptcy?

IVAs should be regarded as a very serious step, which is very close to bankruptcy. You could still be made bankrupt if you do not keep up with IVA payments. One of the main differences between and IVA and bankruptcy is that you will generally be allowed to keep your home and some other assets, whereas with bankruptcy, all your assets are used to pay off your debts.

Bankruptcy also excludes you from certain professions, which having an IVA does not. Your future credit rating will be affected less by an IVA than bankruptcy.

Will an IVA Allow Me To Write Off Most of My Debts?

The amount wiped off your overall debt will vary, but on average more than half your debts will be written off.

Are IVAs Free of Charge?

IVAs are set up and handled by Insolvency Practitioners, who are not going to do this work for the fun of it, so there are fees involved. The monthly payments you make will usually contain the fees you are paying to the Insolvency Practitioner. This is why you need to be cautious if you are asking for advice from a company who offer IVAs - it is not impossible that the money they stand to make from your taking an IVA may affect the advice they give you. See the main IVA page for a list of reputable providers.

So How Much Will I be paying in Fees?

That will vary, depending on the company administering your IVA and your own particular circumstances. As a guide, there will normally be a fee of about £2,500 to set up your IVA, then the Insolvency Practitioner will charge you an annual amount to administer it, which is likely to be about £1,000 per year. Over the five year course of your IVA, therefore, you are paying about £7,500 in fees.

IVA Questions - How Much Will My Monthly Payments Be?

That depends on the level of debt and your available income, but usually at least £200 per month. This is based on generally paying back between 30p and 50p for every pound of debt.

Can I Still Use My Credit Card When I Have An IVA?

No. You can't use credit cards of store cards and you can't borrow money in any way. You should still be able to have a bank account, but not with an overdraft facility.

Who Can Get An IVA?

Anyone in England, Wales and Northern Ireland, usually with unsecured debts of about £20,000 or more. Scottish law is different and IVAs are not available in Scotland. You will need to have a steady income and generally some assets too.

Where Do I Go To Set Up An IVA?

Setting up an IVA has to be done through an Insolvency Practitioner, who will generally be a solicitor or accountant. This person will review the details of your situation and deal directly with your creditors on your behalf. You should always shop around, and try to take independent advice before committing yourself to an IVA.

Can I Put Every Debt I Have Into An IVA?

No. IVAs are for unsecured loans only, so any debts you have that are secured against your property are not eligible for inclusion. This means you can't include mortgage debts of any other loan taken out with your property as security. Other debts that can’t be included are council tax, rent arrears, maintenance payment arrears or child support arrears.

What Happens If I Miss A Payment?

When you enter into an IVA you must be very sure that you can make the regular payments. Missing even one could jeopardise your agreement and perhaps lead to you being declared bankrupt. In extenuating circumstances it may be permissible to miss one or two payments, but only with the prior consent of your Insolvency Practitioner.

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All Your IVA Questions Answered