IVA F.A.Q Frequently Asked Questions

Why have I not heard of IVA's?

Despite IVAs being around for a while publicity around them along with the increasing debt situation in the UK has only started growing recently. Over 6,000 people enter IVAs each year. IVAs are a highly regarded, ethical and moral way to deal with debt problems whilst avoiding bankruptcy. Also it's not advertised and is discrete so most people are not aware that an IVA is in place.

What sorts of people enter into IVAs?

Any individual who cannot pay their debts can apply for an IVA. If you cannot pay your debts as they fall due, you are insolvent by law and have two alternatives - bankruptcy or an IVA.

What if my creditors don't agree?

If 75% of your creditors are in favour of your IVA proposal it will be approved. If it is approved the other 25% of your creditors will be legally bound to the arrangement as well. During the negotiations creditors can suggest modifications to the proposal and you can choose whether to accept them or not.

What if my creditors aren't all in favour?

If your creditors don't all vote in favour you still have the option of bankruptcy or an informal arrangement with your creditors

Will My Credit Rating Be Affected?

If you undertake an IVA, you will have to give up all your current credit (e.g. credit cards and store cards) and you will not be allowed to take additional unsecured borrowings. However, this situation will only last until your IVA is completed. After this, your credit rating will be restored and you will be able to borrow again.
Also after your IVA is completed, you will be able to take out a secured borrowing such as taking a mortgage to buy a house. In fact, it is possible to take or change a mortgage even while you are still within an IVA but you will need to make sure you get the advice of your Insolvency Practitioner for this.

The bottom line is that undertaking and IVA does not mean that you are “Blacklisted” for ever. In fact, your credit rating will be repaired faster than if you carried on struggling with your debt alone.

Will my home be safe?

When you are in an IVAs you won't usually have to sell your property. If you do own your home, take reasonable steps at the end of the IVA to re-mortgage. This step is also true for bankruptcy, except that bankruptcy often means you DO have to sell your home.

How Much Will I Have to Pay Into My Arrangement?

Your monthly payment will be based on your disposable income. This is what you are left with after you take away your reasonable monthly living expenses (excluding your debts) from your monthly income. This figure will depend on your personal circumstances and will be agreed between you, the IP and your creditors. Normally the monthly payment will not be below £200.