A. In most cases, a person’s credit rating is already impaired by the time they seek help from a debt management company like Debts.org.uk. When your IVA has been set up, this will be recorded on your credit file and your credit rating will be adversely affected for up to six years from the IVA’s start date. If you’ve already been issued with any default notices, these will also stay on your credit file for up to six years.
During your IVA, you can’t obtain any more unsecured credit without the permission of your Insolvency Practitioner (IP). And when it comes to an end, it may be more difficult and/or more expensive to obtain credit in the future.
A. This depends on how quickly you’re able to supply us with the information we need and on how many debts you have. The more creditors you have, the longer it may take for them to respond to our proposals. However, if you supply us promptly with all the information we need, your IVA could be approved within four weeks.
A. No, it’s up to you to pay the set-up and ongoing management fees for your IVA. However, these will be deducted from your monthly payments before we distribute the money to your creditors, so you don’t need to pay them upfront. The fee amount will have been agreed at the creditors’ meeting.
A. This depends on your individual circumstances. We’ll give you full details about our fees in writing after we’ve discussed your case and before you enter into any agreement with us. You can also find information about our fees in the Terms and Conditions included in your welcome pack. We’re always very clear about our fees and our initial advice is completely free.
A. IVAs are only designed to cover unsecured debts, so any secured debts such as a mortgage, secured loan or hire purchase agreement can’t be included. We’ll always account for your secured debt payments when we work out your disposable income, to make sure you can still meet these priority outgoings.
A. There’s no obligation for your creditors to accept your IVA. It will go ahead if 75% or more of your creditors (by debt value) agree to our proposal.
A. We’ll send you regular statements in the form of an annual report showing how much you’ve paid into your IVA. This report must be issued to you within 2 months of each anniversary of your IVA. The statements will also show the amounts we’ve distributed to each of your creditors, the fees we’ve deducted from your payments and the total amount you still owe your creditors. Any remaining balance will be written off when the IVA comes to an end.
A. Probably, yes. The idea of an IVA is that you pay as much as you can reasonably afford, so if your income or expenditure changes then your payment amount may go up or down accordingly. Your IVA proposal will state how much you’re expected to pay if your income increases and will outline any flexibility with your monthly payments in case of emergency.
If the changes in your circumstances are drastic and mean you can no longer afford your monthly payments, your supervisor may be able to agree new payment amounts with your creditors. However, your creditors aren’t obliged to accept these.
If you experience any changes in your circumstances during your IVA, or if you’re not sure how much you should be paying, please contact your supervisor immediately.
A. It’s important to make all your payments into the IVA on time, as missing payments will extend the IVA term. Missing payments could also cause the IVA to fail and, in the worst-case scenario, could lead to bankruptcy. However, sometimes missing a payment is unavoidable. If you find yourself unable to make an IVA payment, you must tell your supervisor as soon as possible, who may be able to vary the terms of your IVA if your monthly payments have become unaffordable.
A. A typical IVA lasts for five years. Provided you make all your monthly payments on time, any outstanding unsecured debts within it will be discharged when the IVA comes to an end. You’ll still be bound by the terms of your IVA until your IP has issued a final report.
A. Possibly, depending on your circumstances. The idea behind an IVA is that you’re able to make monthly payments towards your debts from your disposable income. So if you’re studying full-time and/or your income is very small, or if you have no money left over after paying for essentials such as food and utilities, then an IVA may not be an option for you.
However, you may be able to get help towards repaying the IVA from a relative, partner or friend. If this is the case, your IP may be willing to proceed with your IVA. If you’re a student looking for the best way to manage your debts, please contact us so that you can discuss all your options with a fully-qualified debt adviser.
Please note that student loans can’t be included in an IVA.
A. Not usually, no. The information on the Insolvency Register is there to help your creditors prove that you’re in an IVA and to enable them to find the details of your IP. In certain circumstances, the Insolvency Service may consider removing your details from the Register if you have a genuine concern about their inclusion.
A. An IVA legally protects your property. Once it’s set up, your creditors can’t use a charging order to secure debts against your home or try to force your bankruptcy, which would lead to the property being sold. This can make an IVA a more attractive option for homeowners than some other debt solutions, such as a DMP or bankruptcy, which don’t offer this protection.
However, you’ll normally be expected to re-mortgage your home or release equity from it to put towards your IVA. You must release as much equity as you’re eligible for. If you can’t get a re-mortgage, your IVA payment term will usually be extended by 12 months. However, if your circumstances later change and you become able to release equity, you may be able to end your IVA earlier than originally planned.
Although a remortgage or equity release means you’ll be paying a larger amount back to your creditors, you’ll still be able to write off a considerable amount of unsecured debt when the IVA comes to an end.
A. Your payments will only change if this is stated in your proposal, or in any modifications made by your creditors that are listed in your Chairman’s Report, or if there’s a significant change in your income or expenses. For example, you might receive a pay rise or finish paying off a secured debt, increasing your disposable income. On the other hand, changes to benefits or tax credits, or a rise in your outgoings, such as a rent increase, could reduce your income.
You must tell your IP straight away if there are any changes in your income and expenditure during your IVA. They’ll be able to tell you if your payment amounts may need to change.
A. Your guarantor will be legally obliged to pay off the relevant debt on your behalf. Once they’ve done this, they’ll take the place of that creditor in your IVA and receive a proportion of your monthly payments.
A. Your creditors are probably still contacting you because they don’t know about the IVA yet. With large companies such as banks and credit card issuers, it can take time for your information to be processed. Simply tell them about the IVA and refer them to your IP for further information.
Once your IVA’s been accepted and all your creditors are aware, they’re only allowed to communicate with you through your IP. They must accept the monthly payment amounts agreed at the creditors’ meeting and can’t take any other action to recover the debt. That includes sending bailiffs to your home so if this happens, tell your IP immediately.
A. The normal procedure, if you can’t re-mortgage your home or release any equity, is to simply extend your IVA by 12 months. If the terms of your IVA require you to re-mortgage and this turns out not to be possible, please contact your IP straightaway for advice.
A. This may be possible if you come into enough money to offer your creditors a full and final settlement of your debts. This would usually be a loan from family or friends as windfalls such as an inheritance or redundancy payment must legally be paid into the IVA anyway.
If you think you might be in a position to settle your IVA early, please contact your IP. They’ll be able to advise you if your offer is likely to be accepted and if so, will write to your creditors on your behalf. Please note that this process might take several months and you’ll need to keep up your monthly payments in the meantime.
A. This depends on whether the other person is also in an IVA for those debts. If they are, your creditors can’t pursue them. But if they’re not in an IVA, they can be pursued for the full amount of the relevant debts, minus any payments you’ve made through your own IVA.
A. This will be set out in your proposal and/or any modifications made by your creditors that are listed in the Chairman’s Report after the creditors’ meeting. Typically, we’ll distribute payments to your creditors every three months.
A. The point of an IVA is that it’s fair and affordable. So if your income increases significantly, or if you come into enough money to clear your debts, you could be asked to settle the total debt amount plus statutory interest and the costs of setting up your IVA.
A. If you can no longer afford your monthly repayments, you must tell your IP straightaway. They may be able to negotiate a reduction in your monthly payment amounts, but your creditors aren’t obliged to accept these changes. And if they do accept them, they’ll probably ask for a compromise in return, such as extending the IVA’s duration.
Whilst creditors are often sympathetic to unavoidable changes in circumstance, please note that this isn’t guaranteed and your IVA may fail if you don’t comply with its terms.
A. During your IVA, you won’t be able to get any more unsecured credit without your IP’s permission and your credit rating will be adversely affected for up to six years after the IVA’s start date. However, once your IVA has come to an end, you can start rebuilding your credit rating by using credit sensibly.
Please note that defaulting on your credit agreements will always damage your credit rating and any missed payments will stay on your file for up to six years.