IVAs (Individual Voluntary Arrangements) were introduced by the government as part of the Insolvency Act 1986, and are a legally binding contract between you and your creditors.
You pay just one affordable monthly payment to your creditors over a period of 60 months. Once you have completed your IVA any outstanding debt is written off as part of the agreement.
An IVA can only include your unsecured debts. Unsecured debts include credit cards, store cards and personal loans. An IVA cannot deal with any debts that are secured against your assets, such as your home. If you fail to meet your repayment obligations for these, then your creditors can take various actions including the forced sale of the asset.
As an IVA is both legally and financially complex the time that it takes to set up can vary.
If you act promptly with sending us the required details then we should be able to process your IVA in about four to six weeks.
If you find yourself in a situation where you cannot afford your monthly IVA payment then it is important that you contact your Insolvency Practitioner immediately. They will be able to advise you on your best option.
If you miss any payments then your creditors can start bankruptcy proceedings against you.
For your IVA to be accepted, your proposal needs 75% of the creditors (by value of debt owed) to vote in favour for it to be accepted.
If your get refused by a creditor/s who you owe more than 25% of your debt to, then your IVA application will automatically fail.
As long as you have completed your IVA in accordance to the terms of your proposal, then your creditors will have no further claim against you and your unpaid debts will be written off.
The main benefit of an IVA over Bankruptcy is that you do not have to sell your home. Under an IVA, your mortgage, and any other secured payments, will be prioritised, which means we will ensure that you repay them before your IVA contributions are taken. However, you may have to release part of the equity in your home.
Unlike bankruptcy, your IVA will not be published in the local papers so you should not suffer from adverse publicity.
Yes, you can still keep your bank account, but if you owe money to that bank then All Clear Finance will advise that you close it and open up a new ‘simple’ bank account (without a cheque guarantee card or overdraft facility) with a bank that you do NOT owe money to.
Yes, entering into an IVA will damage your credit rating, which will affect your ability to borrow more debt. During the term of your IVA you will not be able to take out any further credit. But the last thing you should be thinking about doing is borrowing more money whilst you are on your IVA.
There will be reference to your IVA on your credit file which will remain there for six years, which is one more year than the length of your IVA.
As soon as your IVA proposal is prepared then the court will be notified, which is usually sufficient to stop proceedings. If this does not happen then your advisor will write to the court and the creditors.
No, as an IVA is as legal process it means that once it has been set up it cannot be cancelled.
Yes. This is a complex matter so we will not discuss it in detail here. Self employed people can undertake IVAs and small companies can do CVAs. If this applies to you then we please contact our All Clear Finance advisors on 0808 131 0038, who will discuss this in detail with you.
Yes an IVA can include a CCJ (County Court Judgement). This will override your previous judgement, so anything that was being paid into the CCJ will not be paid into the IVA.
One of the key benefits of an IVA over Bankruptcy is that details will not be published in your local press. Creditors will obviously be aware of your situation and your employer if it affects your job position, but it is up to you who you tell about the IVA agreement.