Providing that all the terms of your proposal have been fully carried out, then your creditors will have no further claim against you meaning that any outstanding debts will be written off.
For an IVA you will probably have three or more creditors.
We will detail your household income (take-home pay and benefits) and expenditure (i.e. food, utility bills and secured lending). By deducting your expenditure from your income you are left with an amount (often called ‘‘Disposable’ income) which is all you have left to pay off your unsecured debts. In the example below, you can expect to pay a monthly contribution of £250 to repay your unsecured creditors. through your IVA.
| Monthly Income | Monthly Expenditure | ||
| Your take home pay (inc. overtime) | £1,200 | Mortgage/Rent | £700 |
| Partner’s take home pay | £690 | Council Tax | £100 |
| Other income (Benefits, maintenance etc) | £100 | Water/Gas/Oil/ Electricity/Phone/Mobile | £100 |
| Food/Household/Clothing | £600 | ||
| Car Expenses/Finance | £190 | ||
| TV Lisence/Rental/Sky | £30 | ||
| Public Transport | £20 | ||
| Total household income | £1,990 | Public household expenditure | £1,740 |
| Monthly Disposable Income | £250 | ||
Each case is different and depends on your circumstances. No doubt you have heard of IVA cases where up to 80% of the debt is written off, these are very exceptional cases as the avaerage amount is around 60%.
Example of Debt Write Off:
| Your Unsecured Debts | £30,000 | |
| Contracted monthly payment | £750 | |
| Disposable Income | £250 | (from the above example) |
| Number of months in your IVA | 60 | |
| Contributions into your IVA | £15,000 | (£250/month x £15,000) |
| Debt Written Off | £15,000 | (£30,000 - £15,000) |
| Debt Written Off | 50% | (£15,000 / £30,000) |
Your landlord does not need to know about your IVA as long as your rent payments are kept up to date.
If your circumstances change within the duration of your IVA then you must contact your I.P immediately. It is possible to modify your IVA to reflect this new financial change. If the problem is more of a short term nature, then emergency payments breaks can be taken. However if you miss any payments without permission then there is a strong chance that your creditors will commence bankruptcy proceedings against you.
Yes, but if you owe money to the bank where your salary is paid into, they could take all the funds that they receive, such as your wage! One of the many benefits of an IVA is that you can open a new ‘simple’ bank account with a bank that you do NOT owe money to. This ensures that you are remain in total control of your income.
Your IVA is a private legal agreement between you and your creditors alone. IVAs are not published in your local newspapers so you should not suffer from adverse publicity, but the information is avaliable on a government website.
Typically an IVA should lasts for 60 months.
IVA stands for Individual Voluntary Arrangement where you pay just one monthly amount to your creditors over a set period of 60 months. After your IVA any outstanding debt is written off. IVAs were introduced by the government as part of the Insolvency Act 1986, and are legally binding on all parties.
Applying for an IVA is a complicated legal process which can only be undertaken by a licensed I.P. The costs of setting up your IVA are quite high. Your creditors apply two simple rules in deciding whether or not to accept an IVA:
1: Where your unsecured debts are below £15,000 the cost of the IVA as a proportion of the debt is too high to be economically viable
2: Where the monthly payment is under £200, the high cost of running the IVA would take up to much of the money to make it economically viable.
No, your mortgage, and any other secured payments, will be prioritised, which means we will ensure that you repay them before your IVA contributions are made. Therefore your home is protected as long as you keep up those repayments.
An IVA is legally complex procedure and is therefore only allowed by law to be undertaken by licensed Insolvency Practitioners. If you act promptly to supply us with information then we should be able to process your application in no more thaan 6 weeks.
Yes. This is a complex matter but self employed people can undertake IVAs and small companies can do CVAs. If this applies to you then we will can discuss this in further detail with you.
As soon as your IVA proposal is prepared then the court will be notified, which should be sufficient to stop proceedings. If this does not happen then your advisor will write to both the court and your creditors.
No, an IVA is as legally binding process. So once it has been set up it cannot be cancelled.
Your proposal needs 75% of the creditors (by value of debt owed) to vote in favour. For example, if you owe £40,000, and every creditor voted, then you would require £30,001 of your creditor votes to be in favour of your IVA.
If the creditor (or group of creditors) that refuses your case is/are owed more than 25% of your debt then your IVA application has failed.
There is no exact figure that your creditors will ask for in making the decision whether to accept you IVA proposal. This is a two way decision that must be in interest of both you and your creditors.
Your creditors want to see that you are proposing a fair payment that is affordable and sustainable for the length of the IVA.
Your creditors will in turn agree to freeze interest and charges and also write off a large proportion of your debt. They will cease all recovery and legal activity, telephone calls and letters.
Yes but if you are missing monthly payments then your credit rating is already damaged. A poor credit rating will affect your ability to borrow more debt, but the last thing that you should be thinking about is borrowing more money, whether unsecured or secured.
If your creditors are chasing you before your IVA is accepted, then your I.P can apply to court for an ‘Interim Order’ which means your creditors cannot continue with recovery proceedings against you. The Order remains until your IVA proposal is proposed to your creditors.
When your IVA is in place, your creditors are not allowed to take any action against you. They are legally obliged to contact us, as we act as your legal representative. This might take a little time but within a few months you should not hear from your creditors again.
If you are struggling to meet your current monthly payments, then an IVA could be your best option. If you can answer yes to the following questions then an IVA could be for you.
We will do all the work for you so you don’t have to worry about a thing. Through a series of telephone meetings with you, we will prepare a detailed IVA proposal, which you approve and will be issued to your creditors. If they vote in favour of your IVA, it becomes a legally binding on your contract.
A licensed Insolvency Practitioner (I.P) is the only type of financial advisor that is seen as an ‘expert’ in insolvency procedures under law. They act as Administrators and Liquidators of companies. Some Insolvency Practitioners choose to provide their valuable expert service to help indebted individuals to solve their financial problems without having to borrow more money.
Yes. Once you apply for your IVA, your Insolvency Practitioner will notify the appropriate authorities. They will argue on your behalf that an IVA is in the best interest of all parties. If this is accepted then your Bankruptcy will be annulled once your IVA gets approved
Yes. If you wish to pay a lump sum into your IVA, then we can arrange a variation meeting with your creditors to offer your settlement figure.
Under normal circumstances this will not happen, but it may be that you inherit a large sum or win the lottery, called a ‘windfall’. There will be a ‘windfall’ clause built in your IVA contract that will require you to pay the money into your IVA. As your creditors have agreed to freeze write off a large proportion of your debt, it is only fair that you come to a new arrangement with them.
An IVA is a repayment plan which can only be done with unsecured debts. If you owe money which is secured against an asset, i.e. your home, and you fail to meet your contracted repayment obligations then your creditors can take various actions including forced sale of that asset. Therefore no deal can be done with secured debts.