Our team answers some of the most common questions on the services we cover.
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An IVA prevents creditors from taking action against you and your property. However, before the end of the IVA it may be necessary for you to introduce a sum of money into the arrangement in place of a proportion of your share of equity in your property. This is normally done by raising money on your property either as a remortgage or a secured loan. The refinancing needs to be affordable and there are terms which restrict any increase in your mortgage or secured loan payments to not more than 50% of your contribution. If refinancing is not possible, you are generally able to extend the arrangement for a further twelve months during which you time you pay additional contributions in place of equity.
As soon as you decide to proceed with an IVA then your payments to creditors cease and contributions towards your IVA start. These will be set at a figure which you have agreed you can afford. It takes around 6 – 8 weeks to set up an IVA and the contributions made prior to approval of the IVA, will be treated as a deposit towards our Nominees fees. Once your arrangement is approved you will only pay the monthly contributions agreed by your creditors.
The Nominee’s fee will vary depending on the complexity of the IVA but typically are between £1,000 and £2,000 for IVA’s which are not complex. The Supervisory fees are normally capped by creditors at between 15 and 20% of realisations. The Supervisory fees are drawn monthly from the monthly contributions. All fees will be discussed in detail with you prior to any plan being put in place. (If creditors reject the IVA proposals we do not seek to recover the balance of the Nominee’s fee from you).
Your balances are likely to increase during the set up stages of your IVA; however they will be included in the arrangement. Relevant rules issued by the Financial Conduct Authority recommend that you immediately notify your creditors that you are proposing to enter in to an IVA and are following our advice to stop payments direct to them. We will immediately write to all of your creditors to let them know of your decision. You may if you wish, maintain contractual/token payments to creditors during this drafting stage of your IVA; however this is not a requirement as your creditors will be notified of our involvement as soon as we receive your consent pack which often takes the pressure away from you.
Yes, if you have debts with the same bank. Creditors have the right of set-off, which means they can take your wages to “set-off” against other monies owed to them. If you are not overdrawn and do not have loans or credit cards with your bank then you do not need to open a new bank account.
Please open a bank account with no overdraft facility. Creditors will generally insist that you do not incur future credit which includes allowing your bank account to be overdrawn. For help with opening a bank account see bank accounts.
Yes, we would not recommend an IVA as a solution if we did not believe it had more than a reasonable chance of being approved. It would be unfair to you and a waste of everybody’s time and energy. It is rare for any of the IVA’s that we assist with to be rejected as creditors are generally willing to negotiate.
However, if the IVA is not approved you can put forward other solutions to your creditors including debt management and also bankruptcy. We will continue to help you.
An IVA will be on your credit record for six years which is the same length of time as any other adverse credit is recorded.
In the majority of cases, an IVA will not affect your employment. However, an IVA could have a negative effect on certain types of employment, for example Approved Persons under FCA regulation. Our advisors will guide you and advise you of any likely affect during your consultation.
Yes, once your IVA is approved all further contact from creditors should cease. It may take a while for creditors to amend their systems but within 1 to 2 months of the IVA starting, all communication from your creditors will stop. Creditors are legally bound into the terms of an IVA, consequently preventing them from pursuing you for the debt.
Yes, we can convene a variation meeting to offer a sum of money in full and final settlement of your obligations under the IVA. The sum of money could be raised by:
Creditors are likely to agree to accept a lump sum to bring the arrangement to an early end if you can show that you are paying creditors as much as you can afford.
If you find you cannot maintain your payments, your IVA terms will normally allow your Supervisor to agree to reduce your contributions or allow a payment break. It is important that you keep in touch with your Supervisor if you struggle to meet your contributions. We understand that most of us encounter unforeseen problems and we need to know so that we can help.
Unlike bankruptcy your IVA is not advertised in a newspaper. Your employer will not know unless you choose to tell them. Your IVA is registered on the Insolvency Services register which is picked up by credit reference agencies and as such will be noted on your credit record.
All debt solutions should be very carefully considered. Fees will be charged if a solution is taken in order for us to set up your plan and maintain it – all fees will be outlined during your consultation. For further information on fees, please see the FAQ section of the different solutions available. Retained payment may place you further into arrears. You have the right to a cooling off period of 14 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long-term. Calls to our free phone number from mobile phones and other networks may be charged.
The Insolvency Service website has helpful information at https://www.gov.uk/options-for-paying-off-your-debts/overview to support those who find themselves in financial difficulty.
There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service on 0800 138 7777 or by visiting their website.