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IVA Information

What is an IVA?

An IVA (Individual Voluntary Arrangement) is a formal Insolvency solution designed to help you deal with debts that you can no longer afford. In an IVA, you make reduced monthly payments, usually over a period of 60 months into the IVA. These payments are designed to suit what you can realistically afford to pay. At the end of the IVA, any remaining debts are legally written off. Your monthly IVA payment is calculated by analysing your household income & expenses, your living situation and the total amount of debts your have outstanding. You cannot do an IVA without the assistance of an Insolvency Practice or an Insolvency Practitioner (the professional authorised and regulated to propose and oversee your IVA). We have 5 Insolvency Practitioners in-house.

The basic criteria for IVA eligibility is outlined below.

Insolvent

You cannot afford to pay your debts

Your Creditors

You have 2 or more creditors

Total Debts

Your total debts are over £8,000

An IVA is only suitable for unsecured debts, such as credit cards, loans, payday loans, overdrafts and store cards to name a few. You can find out if you qualify for an IVA by filling in the form below. We will then run through a brief assessment with you to see what options you have available. You can also read some more information about IVAs on this page if you would like to research a bit further.

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IVA Frequently asked questions

Find out everything you need to know about an IVA by reading our extensive list of IVA related questions and answers below. If you have a question that isn't covered here, be sure to get in touch with us and we'll be happy to answer any queries you may have.

The IVA proposal is usually a standard document that is modified to your specific circumstances. It is sent to your creditors to vote on whether or not they approve of the terms within. Common terms will include:

  • An analysis of your income & expenditure
  • From this, your disposable income is calculated
  • The amount paid into the IVA periodically (usually monthly)
  • A background history explaining how your financial difficulties arose
  • Information about what may happen if your disposable income increases during the term
  • Details of any assets that are to be realised or excluded
  • The ability to call future meetings of creditors in the event of a change in circumstances and modify the terms of the IVA
  • Restrictions on obtaining credit

We can have an IVA up and running in as little as 4 weeks. We do most of the work using secure online systems, which can really help speed things up.

Firstly, your IVA Advisor will review your current situation and advise you of all options available for addressing your debts and how much you can realistically afford to pay each month towards your debts. If you decide to pursue and IVA and if it is your best option, then your IVA proposal will be drafted and submitted to the creditors for consideration. They may request amendments if they are dissatisfied with the proposal in its current form. Repayments have to be affordable and allow you to live off the remaining income; otherwise the IVA will inevitably fail which is not in the interest of either party.

After any changes to the proposal have been made (if any), a creditors meeting will be held. Here, creditors will consider the proposal further and vote on their acceptance of it. Attendance is in no way mandatory for creditors and so written voting submission will also be included.

If creditors, making up 75% of your debt agree to support the proposal than an application is made to the court and an order will be made making the IP as overseer of the IVA, to ensure that the obligations under it are carried out.

The usual term of an IVA is five years, and for that period the IP will receive all repayments under the IVA and distribute them accordingly to creditors. Once the term of the IVA has been reached, with all obligations performed by the parties, you free of all obligations connected with the previous debt. In other words, debt free!

An Insolvency Practitioner or IP plays the most important role in the life of an IVA. The IP is the qualified and regulated professional who can determine your best Insolvency solution and advise you of your options. They also put forward your IVA proposal and oversee your IVA. You cannot do an IVA without an IP. If the IP acts on your behalf they will become the Nominee in your IVA.

During the IVA Proposal, the IP will act as a Chairman and hold a meeting with the creditors and negotiate with you and the creditors to have the proposal approved. Sometimes the creditors will ask for changes to the proposal at the meeting.

If the IVA is agreed then the IP will become the Supervisor of the arrangement. In this roll, the IP will have to report annually to the creditors, the court and to you. It will also involve monitoring you to ensure that you are complying with the terms of the arrangement, agreeing creditor claims, making payments to them, and generally ensuring that you are staying in accordance with the terms of the proposal. You will have to comply with all reasonable requests to the Supervisor, which could include periodically providing bank statements, wage slips, and account information.

Standard IVA

An IVA that normally consists of 60 monthly payments (5 years). On completion, your agreed debt repayments are finished, the remaining debt is written off as agreed and your creditors cannot take further action against you.


Lump Sum IVA

You may be fortunate enough to gain a windfall throughout the term of your IVA. In which case, you may be able to conclude your IVA before the 5 years are up, by paying a lump sum of money to your creditors. This is known as "full and final settlement". You can speak to the Insolvency Practitioner in charge of your case for more information.


Joint or Interlocking IVA

A Joint IVA (or Interlocking IVA) is when two applicants choose to make an IVA application together. The couple will often have joint debts.

To be exact, a Joint IVA is actually just two separate IVA applications made at the same time that are interlocking. When a couple is accepted for a Joint IVA they will have to remember that the two IVAs are dependent on each other. If you would like further information about Joint IVAs then contact us today.


Full and Final IVA

A Full and Final IVA is an IVA in which a single lump sum payment is made to settle the debt problem. Although most IVAs are taken over a period of 5 years it is worth remembering that a Full and Final IVA is still an option, albeit a rare one.

For the majority of people, the money to make this single payment could be either a gift or a windfall from a friend or family or from house equity or a redundancy.

When are they used?

This type of IVA is often used when the person in debt has little or no income to offer their creditors but can obtain a lump sum. It is possible that in some cases a creditor will accept the payments previously made into an IVA as a full and final settlement.

This option could also be necessary as it can be hard to get all the creditors to agree on an amount. Creditors will always look at each case separately as many times bankruptcy will not pay as much as an IVA. For a Full and Final IVA to be accepted, then the debtor must offer the creditors more of a return then they would get from a Bankruptcy or a normal 5-year IVA. So, if your creditors see that the Full and Final IVA is the best offer then they will usually agree to this.

You should always make sure that you contact an Insolvency Practitioner to ensure that a full and final IVA is viable and to receive expert advice on the matter. You will be asked to provide proof of the funds and in the case of house equity they will request to see the mortgage offer. At this point they will then contact the creditors to set up a meeting to discuss the situation. As soon as your creditors have agreed, then you will be asked to pay the funds to your Insolvency Practitioner who will then pass this on to your creditors.

Depending on if the money is available then the process could be finalised in several weeks. If the money is coming from a re-mortgage then this could take several months and from a house sale then up to a year.


Company Voluntary Arrangement

A CVA or Company Voluntary Arrangement is similar to those of the IVA. A CVA strives to bring about an agreement between the company and its creditors. A special feature of CVA is that the borrowing company seeks extra time for repayment of its debts and also requests the creditors to write off a certain part of the debts.

Creditors can favour a CVA as it can be considered a lesser evil when compared with the liquidation of the company. While creditors are likely to receive some part of the debt outstanding in the CVA, they may receive almost nothing in the latter situation. Moreover, they would benefit more from trading with the company if it keeps working and may even prosper in the future. Also, the company remains under the management of its board of directors.

An important proviso for the arrangement is that it has to be agreed upon by the lenders of 75% of the total amount of debt money. They agree to the Company Voluntary Arrangement only if they are assured that the management of the company will continue to work satisfactorily and also that it will manage adequate funds to redeem its repayment commitments as they fall due.

A CVA is beneficial in several ways

  • The company is spared of bankruptcy or liquidation.
  • The company can continue trading.
  • Any remaining unsecured debt is written off on completion.
  • The company will be debt free within 60 months.
  • It allows for affordable monthly repayments.
  • All the interest and charges are stopped.

A CVA option is appropriate only when the company is faced with certain specific but isolated events that are not expected to come up in future. These events may include signing an unprofitable contract, uninsured fire or flood accident. These events do not adversely reflect upon the ability of the management to carry on the business in a profitable manner in the future.

  • You will be debt free in five years or less.
  • You and your IP draw up an affordable monthly repayment.
  • You will pay no further interest or charges on your debt.
  • Learn financial management skills that will benefit you for the rest of your life.
  • Receive ongoing support from your Insolvency Practitioner (IP).
  • Avoid bankruptcy and the restrictions it can impose.
  • IVAs provide a better return to creditors than bankruptcy and are therefore more favourable
  • If you adhere to terms of the IVA than creditors are not allowed to contact or pursue you
  • Any equity in your property may have to be released. If you cannot get a re-mortgage your IVA could be extended for up to a year.
  • Failure to meet repayments means you are still liable to repay all of the debt in full.
  • Failure to meet repayments may result in bankruptcy.
  • A minimum monthly repayment is required during the time of the IVa, but it should be affordable for you.
  • Your credit rating will be impacted for up to 6 years from the commencement of your IVA, but can be improved in the years following the IVA.
  • Under the terms of the agreement you undertake to contribute as much as possible within your budget.

Whether or not an IVA is a good idea for you really depends on your own personal situation. The best way to find out is to speak to an IVA advisor who will determine how an IVA will affect you and if it is the best solution for the circumstances you are in. Only then will you know if it is both feasible and optimal. Don't rush in to anything.

The main stipulations are that you must be resident and have debts in England, Wales, or Northern Ireland and your total debt must at least be £8,000 upwards. You will need some sort of stable regular income and have debts outstanding to at least 2 or more creditors. For residents of Scotland, the legislation is slightly different and the equivalent option available is called a Trust Deed.

One of the biggest changes you will have to get used to when you enter an IVA is the more modest lifestyle you will have to adopt. Many people got into debt by relying on credit cards, store cards, loans or general overspending. All of these things will have to change. You will be expected to live on a reasonable but modest budget. Adapting to this will take time but it will set the rules, which will help you escape debt and manage your money more responsibly.

Living with an IVA is not a curse. In fact, you may well just be living with a more "normal" lifestyle. The reason most people get into debt is due to their poor financial planning, overspending, or over borrowing.

When living with an IVA, you will have to adapt to the new situation and will have to plan your finances more stringently. An Insolvency Practitioner (IP) will have gone through all your outgoing and incoming monies to create a payment forecast you could afford. It is still worth it to use tools like our budget planner and debt calculator to see in black and white where your money goes each month.

Remember, if you have any changes in your financial situation for the better or worse, you should immediately contact your IP as per the terms of your IVA. He/she will re-assess your situation and make the necessary adjustments to your payment forecasts.

The length of an IVA can vary but is normally 5 years. After this time, you will be out of the IVA agreement and the only scar that is left will be that it stays on your credit file for another 12 months.

It is important that you do not have a release of tension after the end of your IVA and then proceed with the bad habits that may have caused you to get into debt in the first place. Over the term of your IVA you will have had to live and budget within your means. It is highly recommended that you take these skills on board and build on your new debt free life.

When you propose an IVA to your creditors, it is important that you understand all of the costs and fees. This can vary quite differently with different IVA companies. All of your costs and fees will be laid out in your IVA Proposal. You will offer to re-pay a percentage of the debt via monthly instalments of generally 60 months. The sum suggested is based on what you can afford to pay. The Insolvency Practitioner (IP) will help you figure out this number.

This means that monthly re-payments vary on case-by-case basis and depend on what assets you have and much money you have available after living expenses have been deducted from your monthly income.

Do Not pay Upfront Fees!

This leads to another cost that you should be wary of. Most companies charge a fee for setting up your IVA Proposal. So, where does this leave you if the proposal fails or is rejected. Even more out of pocket! There are some companies that do not charge any upfront fees (ourselves included) for setting up your IVA proposal, so if it fails, or is rejected, you are not out of pocket, which we believe to be much more ethical when dealing with entering a debt solution.

It is the creditors who determine the IVAs costs and fees in the Creditors Meeting. The IVA costs come out of the affordable monthly payment that is set in your IVA proposal. If the IVA Proposal is accepted the Insolvency company or IP then takes the agreed amount from the IVA payments each month, so there are no extra costs on top of the monthly payment. This is discussed more in the fees Q&A below.

If any debts that you are including in your IVA relate to your current Bank Account provider, it will be necessary for you to open a brand-new account that is not related to your debt. Make sure that you check an up-to-date list of which banks and financial companies are linked. You will not need to open a new account should you have one with a completely different bank already.

It is vital that you select a bank unrelated to your debt because if you start missing repayments then they may take any money that is being paid into one of their other accounts and use this to pay and set off the debt. This means that your IVA and creditors will be missing out on vital money. Whereas if you have an entirely new account the bank will be unable to touch the money and it can be put towards the IVA. For this reason, you will be told to open the new account before commencing your IVA.

What type of account should I open?

When it comes to opening a new account, you will not be able to open anything other than a basic bank account. You should not try to open an account that will have any form of credit attached to it. This means no overdraft, credit card or cheque book as you are unlikely to be allowed credit under your IVA.

You may have a debit card facility but only to have access to money that is in the account already.

If at any point you are unsure of what to do then please contact a professional for help and guidance, specifically with opening a bank account for an IVA.

Insolvency Practitioners do not work for free however, this does not mean that you will be facing a bill if you want to undertake an IVA. Most IPs will take their fees from the monthly payment that you pay each month to creditors. You will therefore not have to pay more than your agreed monthly payment.

The proposal that you set up for your IVA will contain information on what you will pay for the services of the Insolvency Practitioner (IP). When you speak to one of our IVA advisors, they can give you specific information on the costs involved but what follows is a brief outline of how the fees and costs breakdown.

The nominee's work will include help with your proposal, the necessary application to court to begin the IVA process, liaising with creditors and setting up the Creditor's meeting. The nominee's fee will usually be a fixed sum, agreed with you before they start any work on the proposal. Sometimes the fee can be split between work done as nominee and work done before that stage, as intended nominee.

The supervisor's costs depend in part on the nature of the proposal and what needs to be done to implement the arrangement of the IVA. The supervisor must always report the results of the creditor's meeting to you, the court, and to all the creditors. They will also be responsible for an annual report sent out to all these people. Sometimes there may be work that is unforeseen in the proposal, for example if a creditor takes a dispute to court or if you break your proposal's promises to creditors. You should always be able to contact your supervisor, and you should do so if you are ever having problems delivering your part of the bargain.

The fees of the supervisor may be stated at a fixed sum, as a percentage of the funds coming into the arrangement, or by reference to the time costs of the supervisor and the people working in their staff.

Always make sure that you understand what basis is being used for the fees in your case, and that you are happy with them. Your IP should be able to breakdown the costs and detail where the fees are going.

To get a clearer understanding of the costs involved in setting up and maintaining an IVA it is best to contact one of our IVA specialists.

When you enter an Individual Voluntary Arrangement (IVA) you will find that you need to make quite a few changes to your lifestyle and the way that you spend money. The most important part of this is going to be making sure that you stick to the budget that you have been set so that you can afford to make all your repayments. You will also need to be aware that you will not be allowed any form of credit and if you have been reliant on this then you might find it a shock to begin with.

How much will I be expected to live on?

It is not uncommon for banks to feel that a budget of £150 a month is all that a single person would need to survive adequately on. When you begin your IVA, it is incredibly important that you only agree to a budget that you feel you can actually stick with as you do not want to risk failing your IVA. The last thing you want to happen is to find yourself several months into your IVA and struggling as you may not be able to get your repayments changed and therefore will end up breaking the terms of your IVA if you cannot pay.

It is important that you make sure you stick within a reasonable budget as it is only fair that you pay back as much of your debt to your creditors as possible, do not view this as an easy way out.

How to live whilst in an IVA

The biggest factor to remember is that you must stick to your budget. Do not be tempted to go over this as you will just end up in trouble once again. You might find that when it comes to the weekly shop that you must cut out luxuries, change supermarket or drop down a brand level to help save you money.

Remember that you are not allowed any credit during this time and if you fail to meet your repayments you will most probably fail your IVA.

Creditors tend to favour IVAs over Bankruptcy as it allows for them to receive some of the oustanding money owed. Whether or not your IVA is accepted is determined in the creditors meeting. In order for the IVA to be accepted, at least 75% of your creditors, by debt value, have to vote in favour of it. The creditors may suggest or propose changes to the IVA in order to accept the proposal, but you can choose whether or not to accept these changes before proceeding.

We have a good reputation with the credit houses and know how most of the different types of creditors respond to IVA proposals in regards to accepting or rejecting. This outs us in good stead to know what will be accepted and so we will only put forward IVA proposals that we are optimistic about getting approved. We have a very high success rate. On the rare occasion where your proposal might be rejected, we have other options that you can look into, even temporarily.

An IVA can be a good choice over Bankruptcy if you are self-employed. If you stick to the terms of your IVA, you can carry on running your business under your sole control with no outside interference. You do not have to cease trading. Or if you are in a partnership, it does not have to be dissolved and if you are a company director you can continue to be one.

Bear in mind that your name will be on the Online Insolvency Register and an IVA will affect your credit rating.

Your tax returns must be kept up to date and maintained during the IVA of course. If you have outstanding debts with HMRC, they could vote in favour of or against your IVA proposal. Speak to one of our advisors if you would like to know more about doing an IVA whilst running a business. We specialise in dealing with IVAs for people who are self-employed.

If you do an IVA, there are no doubts that your credit rating will be affected. This can be a scary thought for someone, but if you bear in mind that you are struggling with debt, then chances are your credit rating will be affected anyway and if you don't address the situation now, it could eventually lead to bankruptcy. Bankruptcy will remain on your credit file for a long period of time, but with an IVA you are showing that you are both willing and trying to address and pay for your debts and on completion your credit rating will eventually repair and return to normal.

During an IVA you are not allowed to take out any further unsecured credit such as credit cards, store cards, personal loans, etc. This is a standard stipulation of an IVA and a note will be put on your credit file alerting lenders to this fact. This note will generally remain on your credit file until one year after the duration of the IVA. While this record is on your credit file many lenders will choose either to lend at a high interest rate or not at all.

If you are or have been in an IVA, then you may wonder how this will affect your credit rating. You may find to begin with that your rating has declined due to your debts, but it is possible for you to increase this and obtain credit. If you are still currently in an IVA, then the best way for you to do this is to complete your IVA and avoid missing payments.

How to improve your credit rating

Once you have completed your IVA you will be able to improve your credit rating. There are several ways in which you can do this, and these can include making sure you pay all debts on time and obtaining a copy of your credit report from one of the agencies and checking it thoroughly. It may be that there is an error in which case you can try to get this changed. You should also avoid applying for lots of credit all at once. If you do have a bad credit rating, then it is important that you do not attempt a quick fix by contacting a credit repair agency.

After your IVA you could also make sure that a copy of your completion letter is sent to the main credit reference agencies so that they are aware that you have completed your debt.

Factors that will adversely affect your credit rating.

It is important to be aware of the factors that will reduce your credit rating. These include applying for too much credit at once and creating multiple searches, missing payments, or paying late. Also included are any defaults that you may have, along with County Court Judgments, and bankruptcies. It is worth noting that any negative information such as this can remain on your credit file for 1-6 years. It is therefore wise to avoid getting into any of the above situations if you wish to take credit in the future.

At the end of an IVA process you will receive a Certificate of Completion from the supervisor / Insolvency Practitioner, who will also inform your creditors. Normally this will happen within three months of the final payment. A copy of this will also be sent to the Insolvency Service for their records, so the Insolvency Register can be updated and your details removed. The Credit Reference Agencies will also need notified which is your responsibility. Doing this is an important step in the process of repairing your credit rating.

It may be that you miss several repayments and if you do so without a good reason then your Insolvency Practitioner may fail your IVA. If you do have a valid reason for missing payments then a variation meeting may be called to allow some change in the terms of your IVA, such as reduced payments. Whatever the reason you must make sure that you always keep your Insolvency Practitioner involved with what is happening.

At some point during the length of your IVA you may have difficulties with work or illness and in such cases you should contact your Insolvency Practitioner immediately. It may be possible that whilst you are struggling with these issues your Insolvency Practitioner can contact your creditors and ask to suspend the payments. They may in some cases discuss with your creditors the possibility of finalising your IVA and concluding a full and final settlement.

If during the IVA, you realise that you cannot manage the payments as you have underestimated your outgoings, then again, make sure you contact your Insolvency Practitioner straight away. In such cases it may be possible to reduce the payments that you are making, but be aware that some IVAs do not allow this within the first two years. It is therefore vital that you plan carefully before entering into such an agreement.

If you fail to meet the terms of your IVA by defaulting on several payments, then the supervisor of the IVA could begin bankruptcy proceedings against you. The best thing to do is get in touch with your Insolvency Practitioner and explain why your situation has changed or is going to cause you to miss a payment and see if anything can be done. No one wants your IVA to fail so your supervisor will want to see what can be done to try and rescue the situation.

When you agree to the terms of an Individual Voluntary Arrangement (IVA) it is important that you make your repayments as stated. If for some reason you do not do this then you will be sent notice of your breach and if you still do not make payments you will ultimately fail your IVA.

Setting up an IVA

When an IVA begins, it must provide your creditors with more then they would get should you be declared as bankrupt. If this will not be the case then your IVA will not be accepted by your creditors and you will have to investigate other avenues.

It is important that when you are setting up your IVA that you make sure you declare all of your earnings and any other forms of income. If you are found to have not done this, then again, your IVA will likely be declared as failing.

Once you have successfully managed to set up your IVA with your Insolvency Practitioner (IP) then it is vital you set your budget realistically. This is one of the main reasons an IVA will fail as you will be unable to meet your repayments and therefore break the terms. Should this occur it is important that you contact your IP immediately.

What happens if you do not keep to the agreed terms?

Failure to keep to the terms set out in your IVA means that you will be issued with a Notice of Breach. This notice will be sent just to you and will give the details of the breach that has been made.

Once given the Notice of Breach you will be given approximately one month to rectify the situation and let them know why the problem occurred. If you do this then you should be able to carry on with the IVA and sometimes rearrange the terms.

However if you do not rectify this notice then your IVA will fail. Your IP would then most likely give you a Certificate of Termination and may present a petition for your bankruptcy.

Why would my IVA fail?

The main reason an IVA fails is through lack of money. This may be because you were trying to survive on too little and could not manage or it may be that you simply do not have enough funds. Whatever the problem is you should contact your IP immediately and inform them.

If the Bankruptcy hearing has yet to take place than is it possible to set up an IVA. The Insolvency Practitioner may need to issue an Interim Order to halt the bankruptcy proceedings while the IVA proposal is put together. If the Bankruptcy Order has been issued already, doing an IVA is made somewhat more difficult as it's harder to reach an attractive proposal with the creditors, as bankruptcy costs must be taken into account on top of the costs of setting up an IVA; but it is not impossible. Get in touch asap to speak to us and see if there is an IVA is possible.

Unlike with bankruptcy, an IVA will not force you to sell your home. You may be asked to release some of the equity in your property (if you have any), at the end of your IVA, to pay your creditors though. If you are unable to get a re-mortgage and release equity, your IVA could be extended for up to a year.

An Individual Voluntary Arrangement (IVA) can affect the equity in your property and it is therefore something that you need to carefully think about before entering into. For some people it may not be the best solution to their problems but for others it may provide much needed help. It is imperative that you make sure that you have adequate information on this subject to make a well-informed decision.

If you have equity in your home, it is likely that by re-mortgaging your property you will be able to use some of this money to repay some, if not all, of your debts. If your property has equity in it that can be released then this will most likely be included in the arrangement at some point.

The majority of people will make the choice to re-mortgage their property in order to release equity for the IVA. If this is not possible for you then IVA creditors will most likely expect your IVA to be extended to 6 years instead of 5.

If you are in an IVA, then the good news is that you can still take out a mortgage or a re-mortgage. There will of course be areas that you should obtain professional help and guidance and you will need to discuss this with your Insolvency Practitioner.

Mortgages

It is advisable to seek the advice of a mortgage advisor who specialises in adverse credit. It is worth bearing in mind that the mortgage products and rates available to you will also be based on your circumstances. Remember that you will be unlikely to obtain a mortgage if your IVA has failed.

When you decide to obtain a mortgage, you should remember that you will be required to put down a deposit and pay certain fees such as stamp duty and the solicitor's fees. Should you be able to borrow or be given money from family or friends then this person should consider protecting their money from creditors, through a Deed of Trust.

Please note that, if during the time of your IVA, you do buy a property then the property is likely to increase in value and your creditors will want some of the equity if your debt is not repaid in full by the end of the IVA.

Re-mortgaging

Re-mortgaging is not uncommon and will be agreed if it means that you can pay off all, or a large amount of your debt. You will need to discuss the plan with your Insolvency Practitioner as they may be concerned that you could end up having to reduce your IVA payments.

It is vital that you remember that missing a mortgage repayment means you risk repossession and failing your IVA. Should this occur then make sure you seek professional advice.

How do I go about obtaining a mortgage or re-mortgage during my IVA?

It is important that you speak to a specialist mortgage advisor who can provide you with the information needed to make an informed decision. They will be able to advise you of the products available to you and offer you advice. Make sure you select a mortgage broker that has the necessary experience in dealing with IVAs and adverse credit lending to make sure you obtain a suitable package.

If you have other valuable assets, these will be assessed on a case-by-case basis. It is usually possible to exclude a car of a certain value on the basis that you require it travel to work. There are different requirements if your car is financed on a Hire Purchase agreement.

In IVA terms, if you come into a lump sum of money during the term of the IVA, this is known as a financial windfall. It is normal for IVA agreements to contain a windfall clause, meaning that assets such as lottery winnings, bonus payments, inheritance, and gifts must be declared to the Insolvency Practitioner and paid in to the IVA for the benefit of the creditors. If your financial windfall is a reasonable sum of money, you may be able to settle your IVA full and final, so you are able to finish making payments and your IVA will be completed early.

A Full and Final IVA is an IVA in which a single lump sum payment is made to settle the debt problem. Although most IVAs are taken over a period of 5 years it is worth remembering that a Full and Final IVA is still an option, albeit a rare one.

For most people, the money to make this single payment could be either a gift or loan from a friend or family or from house equity or a redundancy.

When are they used?

This type of IVA is often used when the person in debt has little or no income to offer their creditors but can obtain a lump sum. It is possible that in some cases a creditor will accept the payments previously made into an IVA as a full and final settlement.

This option could also be necessary as it can be hard to get all the creditors to agree on an amount. Creditors will always look at each case separately as many times bankruptcy will not pay as much as an IVA. For a Full and Final IVA to be accepted, then the debtor must offer the creditors more of a return then they would get from a Bankruptcy or a normal 5-year IVA. So, if your creditors see that the Full and Final IVA is the best offer then they will usually agree to this.

How would I go about a Full and Final IVA?

You should always make sure that you contact an Insolvency Practitioner to ensure that a full and final IVA is viable and to receive expert advice on the matter. You will be asked to provide proof of the funds and in the case of house equity they will request to see the mortgage offer. At this point they will then contact the creditors to set up a meeting to discuss the situation. As soon as your creditors have agreed, then you will be asked to pay the funds to your Insolvency Practitioner who will then pass this on to your creditors.

Depending on if the money is available then the process could be finalised in several weeks. If the money is coming from a re-mortgage, then this could take several months and from a house sale then up to a year.

Having financial difficulties can be a very stressful and worrying time and even more so if you are alone or are too scared and embarrassed to tell your partner.

Do I have to tell my partner?

Although there is no rule to say that you must tell your partner about your problems, it is always best to be honest and get it out in the open. However, if you have shared debts or rely on your partner's income then you will have no choice but to tell them.

In cases where you enter an IVA you will be forced to maintain a strict budget for several years, so you may find that you must tell your partner in order to stick to this. Keeping any secret from your partner, but especially one that involves money, can cause family problems later.

What If I am alone and in debt?

It is not uncommon for many people to live alone these days. This could be through choice or it could be because of a relationship breakdown, divorce, or a death. If this is the case, then you may find yourself with no one to talk to or help. When you are facing debt problems it can often be a lonely place, so it is important that you keep in contact with family and friends and talk to them if necessary.

Sadly, many people over the age of 75 live alone and there can often be a lack of debt support for this group of people. Many elderly people are also forced to survive on a state pension and often have some form of debt either from credit cards, an overdraft or loan.

It can often be a relief for those in debt to find help and start to tackle their financial problems. It is always worthwhile speaking to a professional for help. When you find yourself in debt problems you need to look at how you got there and find help to prevent this from reoccurring.

An IVA is a very serious proposition for people that really want to get out of debt, but providing your lifestyle is not excessive (which it really shouldn't be if you are struggling with debt repayments), you will not have to change it much just because you entered an IVA. There are specific guidelines to ensure that you/your family will have a reasonable standard of living. When you first enquire about an IVA, an advisor will run through a financial statement with you, whilst considering these guidelines, in order to determine a realistic lifestyle budget.

You will be expected to live within this budget, which is why it is very important that you consider all of the normal household living expenses you can think of and include them in your financial statement. If you think you are going to struggle with your budget, then chances are you haven't formulated your budget correctly or thought of everything. The IVA advisor will help you cover every single expense, so don't worry if you've missed something.

You are not allowed to take out any additional credit during an IVA, so you will have to learn to live without using credit cards, loans, store cards etc...

When you decide that you wish to settle your IVA early you should inform the supervisor who will then call what is known as a creditors meeting. This will give the creditors the opportunity to consider your offer. During this time, it will also be necessary for a new financial statement to be produced which will state any information regarding the funds that have been made available.

Should the creditors accept an early settlement then a time limit will be set by which the funds should be paid. Often this will be around three months.

In what circumstances might you settle your IVA early?

There are several ways in which you might suddenly find yourself in a position to complete your IVA early. It could be that a friend or family member can offer you a lump sum of money. If this is the case, then your IVA supervisor will need to be informed so that they can decide if the offer is feasible. They will also want to know the origins of the money and be given proof that it is available to settle the IVA.

Many people often decide to sell their house so that they can have the peace of mind to settle the IVA early. Should this be the case then your creditors will normally be happy to accept a large percentage of this equity.

Some people will choose to re-mortgage their house to release the equity so that they may settle their IVA early. Although this can be a great way to settle, you should be aware that the repayments could be quite high due to your debt history. Therefore, make sure that you can definitely meet the repayments and living costs without getting yourself into any further debt.

There are some professions in which you cannot do an IVA. It is best to check with the professional organisation of which you are a member to see if undertaking an IVA will impact your accreditation. In certain professions, undertaking an IVA can be contrary to the conditions and terms in your employment contract so you should ensure that this is not the case. A good IVA advisor will know what professionals can and cannot do an IVA.

Some Insolvency Practitioners have, over the last number of years, begun mass marketing IVAs as a no-hassle alternative to bankruptcy. The general public tends to have a negative connotation towards the idea of bankruptcy so some dubious IVA companies feel that they can easily steer people in whatever direction they want.

An Insolvency Practitioner (IP) should have several meetings with each of their clients to discuss and investigate their options and determine if an IVA is right for their situation. There have been cases reported of clients not even speaking with an IP during the process and many more of IPs suggesting than an IVA is the only solution. This is irresponsible and could end up causing you serious financial difficulty in the future. For example, people that don’t have any assets or equity are probably better served by getting a bankruptcy order. There are also a lot of people that could get their finances in order just by simply making a budget and sticking to it or by being more conscientious with their spending.

One thing that we want to emphasise is that there isn’t one debt solution for everyone. If you’re feeling pressured into one solution you should seek other advice.

An IVA company has a duty to care for their clients and to offer them the best advice, which means that they will be turning away some business. It is not acceptable to ask someone in debt if they want to get an IVA and then take that answer at face value without going through the repercussions of such an important decision.

As a full service debt solutions provider, IVA.net prides its self on offering debt solutions that are catered to your specific needs, whatever they may be.

Please take note of the follows things before you decide to get an IVA:

1) Take a close look at your financial situation: money in, money out, necessities, where you could save money, who you owe money to etc. Our IVA calculator may help you with that.

2) Look at all the options available to you and read about them. IVA.net not only discusses IVAs but will also show you many other ways of managing your debts such as informal arrangements, debt consolidation loans, administration, and bankruptcy. There is not one solution for becoming debt free and it is important you understand the ramifications of the debt solution that you ultimately choose.

3) With a good knowledge of the options available to you and an understanding of what they mean it is time to speak to a debt advisor. A debt advisor can discuss the options available to you and explain them in more detail. They can then help you to commence proceedings for the option you both agree on.

4) Finally, it is important that before you enter any agreement, whether an IVA or not, that you understand the effect this will have on your life and that you are willing to live through it. You may have to downgrade your car, stop nonessential payments, and explain your finances to a practitioner and so on. It is very important that you realise this prior to proceeding and come to terms with it, as it will greatly affect your future financial success.

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