IVA - Frequently Asked Questions (FAQs)
Here is a list of commonly asked Individual Voluntary Arrangement (IVA) questions we get from time to time...
What type of people enter into an IVA?
Individuals who have debts of £15,000 or more with three or more creditors and cannot pay their debts as they fall due, then they are deemed to be insolvent and the law offers two alternatives which are bankruptcy or an IVA.
Do I have to pay any fees?
In an IVA you pay one affordable monthly payment for the duration of the arrangement (normally 60 months). In return your creditors, (people you owe money to) agree to write off the debt you can't afford to repay. Our fees are taken from the payments that you make. There are no additional fees or charges. Fees may vary, however they will be subject to a maximum of 35% of total realisations.
How much does an IVA cost?
All the costs associated with your IVA are included in the monthly payments you make in to it.
Costs may vary however you will receive a breakdown of costs prior committing to an IVA. Detail of the fees will be set out in the letter of engagement from us, to you the client, before you agree to proceed.
What are the advantages of an IVA?
You make one affordable monthly payment, all interest and charges are frozen when the IVA is approved and creditors are prevented from taking any further action against you providing you abide by the terms of the arrangement.
When the IVA is approved can the creditors request higher payments?
An IVA is a legally binding contract between yourself and your creditors. You and your creditors are bound by the terms of the arrangement. Your financial situation is assessed on an annual basis and your creditors cannot increase your payments unless there are significant changes to your circumstances. They cannot take further action against you or change their minds after the date of approval.
Can an IVA be settled early?
Yes, we can convene a variation meeting and offer a sum of money as a full and final settlement of your obligations under the IVA.
Can I lose my house once my IVA is approved?
Not as a result of your IVA. Once your IVA has been approved, creditors cannot take any further action against you. Outside of an IVA, creditors can obtain judgments and then obtain charging orders against your property. They can also petition for your bankruptcy, which will mean that your property is at risk.
Which of my debts are included in the IVA?
Credit cards, unsecured loans, overdrafts, store cards, catalogues etc however we will evaluate your situation when we speak to you as this list is not a conclusive one and there may be other debts that we are able to include. We will go through a list of all your financial commitments.
Do creditors have to accept my IVA?
A decision to accept or reject an IVA is made by creditors voting at a creditors meeting.
You will require 75% of voting creditors to accept your IVA at that meeting. If less than 75% (by debt value) vote to accept the IVA, the IVA will fail.
What Are The Disadvantages of an IVA?
- If you don't stick to the terms of your IVA then the Insolvency Practitioner or your creditors can make you bankrupt
- If your circumstances change which means you can no longer afford your monthly payments your IVA may end if the Insolvency Practitioner is unable to convince the creditors to accept a new varied agreement
- If you own a property and you are able to remortgage as there is sufficient equity you will be asked to release that equity in the fouth year of the arrangement (normally anything above 15% to 25%) If the IVA is a single proposal then you are only obliged to release your share of any equity from a jointly owned property.
- During the term of the IVA the debtor will be subject to financial restraints on expenditure. Income and expenditure will be reviewed on an annual basis.
How do I qualify for an IVA?
- 3 or more creditors
- Unsecured debt is more than £15,000
- You can afford at least £200pcm as a monthly payment
- Creditors will expect at least 25p in every £ that you owe them
If you have any questions not covered above, fill out the contact form and we will contact you with any further information.
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0845 094 3725
