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Individual Voluntary Arrangements - Questions


Will I have to pay for the service?

You will not have to pay anything up front. 

When you are satisfied that you want to proceed with an IVA and an Insolvency Practitioner agrees to do this for, you will start making payments at the agreed rate. 

There are fees to pay for the arrangement and supervision of the IVA,  however, you will not be expected to pay these fees directly yourself as the fees are taken from your standard monthly payments. In effect your creditors pay these fees for you out of the money they collect from you during the 5 year period of the IVA.

There are no hidden fees and all costs of the arrangement will be met from the single monthly payment you make for the IVA. This means that for example if you owe £30,000 and the IVA is set up on the basis that you pay £300 per month for 60 months this is all that you will pay. 

How will I know an IVA is right for me?

If you can’t pay your debts an IVA may be suitable for you but IVAs are not right for everyone.  Generally IVAs are not suitable for people who owe less than £15,000 or who owe money to just one or two creditors. Furthermore, they are not really appropriate for people who cannot afford to pay more than £200 per month after allowing for living expenses.

Once you have provided all the information necessary,  we will be in a better position to advise you as to which option is best for you. 

Will I lose my home?

When you enter an IVA assurances can be agreed to protect the family home.

Near the end of the IVA it may be necessary to remortgage your property in order to release some of equity to your creditors. 

How much will I have to pay back?

The terms of your IVA will depend on the size of your debt and the amount of income you have available after your living expenses have been accounted for.

See an example below.

Example: Mr R Jones

Current situation

Total amount of  unsecured Debt

£74,500
Surplus income after deducting living expenses 

£350
Approximate monthly commitment to unsecured creditors

£1,870

Current monthly shortfall

-£1,520

Example IVA proposal
60 x monthly contributions at £350 £21,000
Total amount repaid £21,000
Total debt outstanding which is written off £53,500

 

What happens if only some of my creditors agree?

To approve your IVA, at least 75% by value of the creditors who vote at the creditors meeting, in person or by proxy, must accept your proposals. 

If any of your creditors vote against an IVA or do not vote at all, they are still bound by the agreement as long as 75% in value of creditors who vote are in favour.

Who will find out about an IVA?

Only your creditors and the Court with which the IVA documents are filed will know about your IVA. Unlike bankruptcy, your details will not be publicised. 

When the IVA is approved it is registered with the Department of Trade and Industry which means that if anyone does a credit search against your name the search will disclose you have entered into an IVA.

What can go wrong?

An IVA can go wrong at any time. Your creditors may reject your proposal at the first meeting, and you will be back to square one. You should only consider an IVA if you think major creditors are likely to support your proposal. Your IP can advise further and, if necessary, discuss the matter first with the major creditors.

If the arrangement is approved, it could still fail later for unexpected reasons. You might then still face bankruptcy in two or three years. You should therefore take care not to agree to anything that is not realistic and achievable.


Will it effect my credit rating?

Your credit rating will be negatively affected by the IVA but not as seriously as bankruptcy. The fact that you entered into an IVA will be on your credit record for six years.