About individual voluntary arrangements (IVAs)

How does it work?

We can arrange and manage an IVA for you. We will make sure an IVA is the best solution for your situation. We will then do all the paperwork and support you during the process.

You will make monthly payments based on what you can afford, and we will share this among your creditors.

This payment will include the fees for managing the IVA. Once the IVA is approved by your creditors, they will stop contacting you and cannot take any legal action against you.

Please be aware:

• The IVA will be shown on your credit file for six years. It will also be listed on the Register of IVAs until three months after the IVA has been completed or has been terminated. During this time, you will find it harder to get credit
• You may have to sell any valuable assets you own
• The IVA could fail if you do not stick to what has been agreed. This means creditors will be able to contact you again and chase you for your debts. This will include any interest and charges
• If the IVA fails, there is a chance your insolvency practitioner may ask the courts to make you bankrupt. This only happens if your creditors request it
• If you own property: During the fifth year of your IVA, you may have to look to remortgage your property to pay a lump sum into the IVA. Or, a family member or friend can make the lump sum payment on your behalf
• If you own property: You only need to consider remortgage if you have equity available. Equity is the value of what you own in the property. If a remortgage is not possible, you will have to make 12 extra payments to the IVA. This will take the length of the IVA to six years in total. The advisor will discuss all this with you

What are the fees for setting up an IVA?

You do not have to pay any fees before your IVA is agreed.

All fees are confirmed when an IVA proposal has been put together. This has to be agreed by you and your creditors before it is approved.

All fees are included as part of your monthly IVA payment. This payment is based on what you can afford.

Which debts are included in the IVA?

Most unsecured debts are included in an IVA. Your insolvency practitioner will let you know what debts can be included.

You will need to keep paying your household bills. Only missed payments (or arrears) on household bills can be included in an IVA. The normal payments cannot be included.

IVA and fraudulent debt

If you run up a debt fraudulently, the creditor may be able to get back what you owe. They do this by speaking to the courts. They can do this even after your IVA is completed.

IVAs and joint or guaranteed debts

Before getting an IVA, you should let any other people named on the debt know. This is because you will no longer be liable for the debt, and you will not have to pay it back.

But the debt will still need to be paid back by anyone else named on the agreement, or by the guarantor. They will need to pay the full regular amounts and deal with any arrears. Creditors could take action against the other person if payments are not made up. It may affect the other person’s credit file.

What happens if my circumstances change?

An IVA usually lasts for five or six years.

This may be different if you have assets and will be making a lump-sum payment. But your advisor will speak with you about this.

You will need to think about any financial changes that might happen over this time. This could be changes to:

• Your income or benefits
• The number of people living in your home

You can discuss this with the advisor when they call you. They will let you know how this might affect the IVA.

If things change during the IVA, you will need to let your insolvency practitioner know. They will look at your income and spending again to see what you can afford and give you advice on your options.

Small changes to your payments should not cause any problems. But if there are bigger changes to your payments, the insolvency practitioner may need to ask your creditors to approve them.

The insolvency practitioner will support you through this process.

Important information about an IVA

An IVA is a form of insolvency, where you cannot afford to repay your debts. This means your assets, home and job could be affected.

The insolvency practitioner will look at what you can pay towards your debts. They will also look at what you and your family need to keep for essential spending.

It is important to be open and honest when talking about your finances.

Conditions of an IVA

There are rules that apply to an IVA. Some of these are:

• You cannot borrow more than £500 during the IVA
• You cannot hide assets you own
• You must work with your insolvency practitioner
• You must let your insolvency practitioner know if your situation changes
• You need to make all your payments. This includes your lump-sum payment if this is something you and your advisor agree to

If you break the terms of the IVA, it could fail. This means you will have to pay back all your debt. This includes any interest and charges.

If the IVA fails, there is a chance your insolvency practitioner can ask the courts to make you bankrupt. This only happens if your creditors request it.

An IVA can be extended

Normally, an IVA will run for five or six years. This may be different if you are paying a lump sum towards it.

The length of your IVA can be extended to six years if:

• You are a homeowner and cannot remortgage before the end of the fifth year of the IVA
• You have to take a payment break during the IVA

Your insolvency practitioner will let you know how long the IVA will run for.

An IVA will be recorded on a public register

The IVA will be put on the Individual Insolvency Register until three months after it is completed or terminated. This is available online for anyone to view.

It will also be shown on your credit file for six years from the date it is approved.

IVAs and your assets

Each person has a different situation. Let the insolvency practitioner know about any assets you want to keep. They will discuss these with you.

IVAs and your home

If you own your home:

You do not have to sell your home unless you want to.

During the fifth year of the IVA, you may have to remortgage your property. This is so you can release money to pay into the IVA.

At this time, the insolvency practitioner will run an affordability check to see if this applies to you . If you cannot remortgage you may have to pay for an extra 12 months.

Are you currently thinking of remortgaging?

If you have an IVA, lenders may not offer you the cheapest rate or be willing to provide you with a mortgage.

The advisor will talk with you about this.

If you rent:

The insolvency practitioner will not tell your landlord you have an IVA. This means it is not normally an issue.

But you should check your tenancy agreement before you go ahead. Some have a clause about IVAs.

If your landlord becomes aware you have started an IVA, rules in the tenancy agreement could give them the right to:

• End the agreement
• Refuse to continue your tenancy if you cannot afford it

An IVA can also make it harder to get a new tenancy. The advisor will talk with you about this more detail when they get in touch.

IVAs and your job

There are some jobs you cannot have during an IVA. These are often jobs where you are in control of money on behalf of other people. These are things like legal jobs and some roles in banks and financial services.

Before you apply for an IVA, you should find out if there are any risks to your job. You can do this by:

• Checking the terms and conditions of your employment contract
• Speaking to your employer, trade union or professional body