IVA Frequently Asked Questions
How long does an IVA last?
In the vast majority of cases, the duration of an IVA will be 5 years, though this can vary depending on the individual circumstances of each case.
What type of debts can go into an IVA?
An IVA deals with unsecured debts, such as bank loans, credit cards, store cards and overdrafts.
What type of debts cannot go into an IVA?
An IVA cannot deal with secured debts, such as Mortgages, Secured loans and Hire Purchase agreements.
Can I include Court Fines in my IVA?
No, any court fines or judgements from criminal proceedings must be paid in according to the court’s advice.
What happens to my bank account if I enter into an IVA?
If you have debts with your bank then in most cases you will need to open a ‘Basic Bank Account’ as your old bank account may be frozen and any outstanding overdraft facility will be included in the IVA’s list of creditors.
How much will my IVA repayments be?
Payments into an IVA are based on affordability for the applicant rather than the size of the debt and will vary depending on the individuals’ personal circumstances.
How much are the fees for an IVA?
All fees are paid for from the contributions you make which are agreed by your creditors. See our fees section for a full explanation.
Will my creditors agree to my IVA?
Creditors understand that a small proportion of their customers will fall on hard times and should you go bankrupt, it’s likely that a creditor will only receive a very small percentage if any of the money owed to them. Although an IVA does not normally give a creditor a full return on the debt owed, it does guarantee a percentage back, making it a more favourable option.
Do all creditors need to attend the creditors meeting?
No you only need one but usually, creditors do not attend the meeting, they vote by proxy, (meaning they register their vote without being there). A proxy is a person or agent nominated to act on behalf of an organisation and 75% by value of the creditors registering a vote will need to vote in favour for the IVA to be accepted.
Does an IVA guarantee to freeze all interest and charges?
Yes – an advantage of an IVA is that it legally binds your creditors to freeze all future interest and charges on your unsecured debts from the start date of your IVA, so long as you keep up with the repayments and terms set out in your proposal.
Can creditors change their minds once an IVA had been agreed?
No, once the IVA proposal has been accepted by your creditors they are bound by the terms and, as long as you maintain your obligations (ie, keep up the payments and tell your supervisor if your circumstances change), they cannot take further action against you or demand a higher repayment from you.
Can I enter into an IVA if a bankruptcy order has been made against me?
Yes, as long as you have not been discharged from bankruptcy it is possible to annul a bankruptcy and enter into an IVA if it is a more appropriate solution for you.
What will happen to my home in an IVA?
Your home will be protected and an IVA will stop creditors from taking legal action to make you sell it although if you have more than £5,000 of equity in your home you may be asked to remortgage during the course of the IVA and release the funds for the benefit of your creditors. If there is no equity or you can’t remortgage, you may be asked to contribute to the IVA for a further 12 months.
What if I have a mortgage or secured loan on my property and then enter into an IVA?
You will need to keep up with the monthly payments on your mortgage or secured loan whilst also making your monthly IVA contributions; otherwise, your home may be repossessed.
What will happen to my vehicle in an IVA?
It depends on the vehicle and your circumstances. Usually, you will be allowed to keep a vehicle worth a reasonable amount, especially if it is needed for work or family commitments. Vehicles on hire purchase are also allowed so long as the payments are not excessive. You will need to maintain payments to the HP company otherwise your vehicle may be repossessed. Once the term of the HP has concluded you will be expected to make increased payments into the IVA as your outgoings will have lowered.
How does an IVA affect my personal pension?
Your personal pension is not at risk in an IVA, however, you may be asked to reduce or suspend payments into it for the duration of the IVA so that your IVA repayments can be increased
What happens if I receive a windfall during my IVA?
If you come into some extra money such as an inheritance or improved salary you could be required to make increased payments. Typically you would be expected to pay in the majority of any windfall, up to the total amount outstanding in your IVA and up to 50% of any salary raises or bonuses that you may receive.
I have a savings account – can I keep it if I enter into an IVA?
You must release money from savings accounts to pay towards your debts; otherwise, your creditors will not accept the IVA proposal.
Who will know if I enter into an IVA?
If you undertake an IVA, it is a private matter between yourself and your creditors. However, your IVA will be logged on the insolvency register which is available on the internet.
How will an IVA affect my credit rating?
An IVA will stay on your credit file for a period of 6 years, beginning at the start date of the IVA. Your IVA will not impact on your family’s credit rating or other people that may live in the same property as you, so long as you do not have any joint unsecured debt with them.
What happens when my IVA ends?
As long as the terms of your IVA have been met, your creditors will have no further claim against you and the balance of any unpaid debts will be written off. You will be provided with a certificate of completion to inform the credit reference agencies that your IVA has been successfully completed and you will once again be able to apply for credit.
What happens if my IVA fails?
If an IVA is deemed to have failed, you will no longer be protected from your creditors and you will be responsible for arranging future repayments with them