What happens to the payment?
The payments you make will be distributed on a regular basis to the creditors. In return for making a commitment to pay what you can reasonably afford the creditors will agree to be bound by the arrangement. The IVA has added powers to a simple contract. Even creditor who have not agreed or bothered to vote for the arrangement will be bound by its terms.
What is the fees payable in an IVA?
Nominee’s Fees – this is the fee payable to the Nominee to cover all work and assistance with the proposals prior to the creditors meeting, the preparation of the Nominee’s report, the convening of all creditors meeting and the filing of the Chairman’s report of the meeting in Court. The fee payable to the Nominee must be disclosed in the proposals, plus out of pocket expenses and VAT. The Nominee’s fee is stated in the IVA proposal and is approved by your creditors.
Supervisor’s Fee – this is the fee payable to the Supervisor to cover all work relating to supervision of the IVA post approval by the creditors. The Supervisor’s fee is stated in the IVA proposal and is approved by your creditors
These fees will be paid from the monthly contributions you propose to make as per the terms and conditions of your proposed voluntary arrangement. If your creditors do not agree to your IVA then there are no fees to pay.
How much will I have to pay back?
Many adverts for IVAs explain them as a way of walking away from your debts. But the fact is, creditors will only agree to an IVA if they are convinced they will get back more money than making you bankrupt. As a general guide, you can expect to pay back at least 30p for every pound owed.
How will I know if an IVA is right?
If you cannot pay your debts then and IVA may be right but IVAs are not right for everyone who has debt problems. All sorts of people enter into IVAs. Generally IVAs are not suitable for people who owe less than £15,000 or who owe money to only one or two creditors. You also need to be able to afford more than £250 per month to enter an IVA. If you do not fit the criteria for an IVA you may be able to enter a Debt Management Plan, call us on 0800 121 48 63 to check which you would be eligible for.
How long does it take to set-up?
An IVA can usually be set-up in approximately 6-8 weeks. During this time you will be obliged to pay all interest and charges.
What happens to my assets in an IVA?
When entering into an IVA a home will be protected from being sold. Creditors will no longer be able to take any court action. Before the end of the IVA it may be necessary to realise up to 85% of your equity share in your home by arranging a re-mortgage or further advance. If you have difficulties doing this then the VIA can be varied with the agreement of the creditors. This may mean that creditors will accept a reduced amount if that is all you can afford or creditors may agree that the arrangement shall be extended for up to 12 months and income contributions are paid in place of obtaining the remortgage.
If you have an endowment policy linked to the mortgage it is likely that this will have to be surrendered towards the IVA as will any shares or savings funds.
When calculating you income and expenditure we take into consideration all payments towards secured liabilities. The IVA only deals with unsecured debts so any payments towards either a secured loan or a mortgage are made during the IVA and continue as normal once the IVA is completed.
If you are in the middle of paying a car off under a hire purchase deal you can’t include this debt in the IVA as the finance company will just repossess the car. Normally you will be allowed to keep making the monthly payments towards the car yet when the finance deal ends you will need to pay the extra money into the IVA instead.
What happens if only some of the creditors agree to the proposal?
Because the IVA is a ‘statutory’ contract it does not matter that some of the creditors do not agree to the IVA or that some of the creditors simple ignore it. As long as 75% in the value of creditors who vote are in favour of the IVA then all the creditors will be bound by the IVA.
Who finds out about an IVA?
The only people who find out that the IVA are the creditors and the court with which the IVA documents are filed. When the IVA is approved it is registered with the Department of Trade and Industry, who hold a public register of IVAs, this is available from their website. It also means that if anyone does a credit search against your name the search will disclose you have entered into an IVA
Are there any disadvantages to an IVA?
In order for creditors to agree to an IVA then you may have to propose to pay more than you would have done if you were made bankrupt. You will need to be confident that you can manage the payments towards the IVA because if the arrangement fails then creditors will be able reclaim the whole amount of their outstanding debts and interest and costs as they will no longer be bound by the arrangement.
Will I be able to get credit again?
During the term of the IVA you cannot obtain credit without the agreement of the Supervisor of the IVA. Your credit rating will be affected by the IVA for up to 6 years.
What if my circumstances change during the IVA?
If your circumstances change you need to contact us immediately. We will reassess your income and expenditure accordingly. If the change in situation is permanent, then in some cases we can work out what you can realistically afford and, if necessary, ask the creditors to lower the payment. There is no guarantee they will say yes however, so when setting up an IVA it is crucial that the monthly payment amount set is realistic.
What is my debt is in joint names?
If two people jointly enter into a credit agreement, you are both liable for the whole amount of the debt. This is known as ‘join and several liability’. For an agreement to be joint and several, it must be signed by all parties in the form required by the Consumer Credit Act. So, if you have not signed such an agreement, you are not liable for your partners debts, if in doubt check your loan agreement. However, joint liability can also apply to rent arrears or joint tenancies or arrears on joint mortgages or council tax payments for couples and to water/sewerage charges on properties which are jointly occupied.
If I die what happens to my debt?
Any debts become the liability of your estate. If there are sufficient assets in the estate to settle the debt then this will be done by the executors. Creditors may sometimes attempt to claim payment from a partner or relative, particularly if you lived with them, but if the estate cannot settle the debts, partners or relatives are not obliged to repay the debts. There are several possible exceptions to this rule
- Debts for which someone has joint or several liability with the deceased.
- A mortgage remains on a property even if this passes to a new owner by inheritance (although it may be paid of by an insurance policy at death.)
- Taking over tenancy from the deceased by succession, which may involve taking over rent arrears if these cannot be paid by the estate. A tenant by succession can lose their home if the arrears are not paid.
- For married couples, there is joint liability for council tax. In the event of a spouse’s death, the surviving partner remains liable for any arrears.
How long will I be chased for an outstanding debt?
Most debts can be pursued for six years, in accordance with the Limitations Act 1980.
What happens if I owe money but leave the country?
If you move abroad, payments of all UK debts will still be pursued by the creditors. If you have County Court Judgments, these won’t enforced by Bailiffs but the creditors may attempt to recover the debt via local debt collection agencies. It is unlikely that the creditors will write off the debts.
If you have any further questions contact us on 0800 121 48 63
