Pareto Money IVAs are now being supervised on 02031 314 226

IVA Frequently Asked Questions

What are the advantages and disadvantages of an IVA?

  • Once approved, it is legally binding on ALL creditors even those who were not in favour of your payment offer.
  • Unsecured Creditors cannot take any further action against you or your assets.
  • On completion of your IVA, the remaining balance of the debt will be written off.
  • You may be able to continue running any business you have.
  • One affordable monthly payment which usually lasts for 5 years.
  • All interest and charges on your debts will be frozen.
  • All contact from your creditors will cease.
  • You will be expected to pay in any unexpected lump sums of money you may receive such as inheritance.
  • Homeowners will be expected to attempt to release equity.
  • An IVA will remain on your credit file for 6 years.
  • You will not be able to obtain credit during the term of the IVA (without the express permission of the Supervisor).
  • An IVA although will reduce the time it takes to satisfy your debts, can be longer than if you was to petition for your Bankruptcy.

Will my home be safe?

You will not have to sell your property when in an IVA nor will creditors be able to take action against the property.

In compensation for the protection of your property, creditors will expect you to try your best to release equity in the final year by way of a remortgage upto a maximum of 85% of its value. However, this may not be possible due to one or more of the following reasons:

  1. You may not be able to afford a remortgage
  2. You may not have enough equity in your property to remortgage up to 85% of the value
  3. You may not be able to obtain a remortgage due to the impact of an IVA on your credit file.
  4. The Remortgage may take you past your retirement age.

If you cannot remortgage you will be expected to extend your IVA by 12 months in lieu of the equity in your property.

Do I need to change banks?

If you owe money to a bank that you have credit cards, loans or other overdrafts with you will need to change banks. The bank will have the right to close any bank account you have and use the funds in that account to repay the debts you owe them. Therefore, before we notify your creditors of any IVA proceedings you would need to open a bank account with a bank you do not owe any money to and organise for your income and any direct debits to be switched over. This will also give you more control over your money. Our advisors will give you any advice you may need on how to change bank accounts.

Do I have to be in full time employment?

No. To enter into an IVA, you only need to have a surplus income above what you need to live on. You will be asked for proof of income during the initial stages of the application.

Do I have to tell my partner?

It is advisable that you tell your partner if you are entering into an IVA. If you live with your partner, it is likely creditors would expect to see a full household income and expenditure, so this may have to be factored in.

Can a creditor take further recovery action before the IVA is approved?

Yes. Until the IVA is approved you do not have the benefit of the security the IVA can provide. However, if you are concerned that there is any legal action or other collection action pending please speak to us immediately and we can discuss this with you.

How are the fees collected from an IVA?

The fees are collected from the payments you make into the IVA and you will be notified of the fees that apply in advance. The fees are not in addition to your monthly contributions.

How long does it take to set up an IVA?

This can vary but providing everything is standard and subject to creditor agreement, it takes typically between 6 and 8 weeks to set up an IVA.

Is my IVA likely to be approved?

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.

Will an IVA affect my credit rating?

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. However it is worth noting that if you have a history of missed or late payments, your credit rating could already be affected.

Will I still be able to obtain credit?

Generally, you will not be able to take out further credit during the IVA without the express permission of the Supervisor. Should you feel the need to obtain credit then you should speak to the Supervisor immediately.

Will my creditors stop contacting me?

Yes, once your IVA is approved all further contact from creditors should cease. From experience 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 by the terms of an IVA, consequently preventing them from pursuing you for the outstanding debt.

If you receive phone calls from your creditors simply inform them that you are in an IVA. Contact your Supervisor and pass on the details of the creditor that is still contacting you and he will get in touch with them and sort things out. The same applies if you receive letters to chase you for payment - forward them on to your Supervisor and he will get in touch with the creditor.

What happens if I forgot to tell you about a creditor I had missed?

You should check the list of your creditors very carefully when you receive your proposal to make sure you've included all of your debts. After the IVA has been approved, if you realise that you have missed a creditor, you should contact your Supervisor immediately as the creditor might be able to be included. This depends on several things:

  • If the debt is small and was simply missed by mistake, the creditor can be included without difficulty.
  • If the debt is large and its inclusion would affect the dividend to creditors, or if it amounts to more than 10% of your total debts, it will be necessary to call another creditors meeting to obtain approval for inclusion and there is a risk the IVA could fail.
  • Whether you have been using the credit facility since the IVA was approved and the reason why the debt was missed.

Remember, you are not permitted to use or obtain credit facilities without permission while you are in an IVA. Doing so is a breach of your Agreement and may lead to its failure. Debts incurred after your IVA is approved cannot therefore be included.

Can my IVA be brought to an early conclusion?

Yes, by offering a sum of money in full and final settlement of your obligations under the IVA. The sum of money could be raised by:

  • Re-mortgaging or sale of your property
  • Contribution by a third party

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.

What happens if I can't pay my contributions or payment is going to be late?

Under the terms and conditions of the IVA you agreed to make your monthly payments on time. If you then miss a payment you are breaking the terms of the Agreement and risk the future of your IVA.

There are of course situations that cannot be avoided, for example, if your car needs repairing or you are sick and unable to work. If this does happen then you must inform your Supervisor immediately and remember to retain any receipts and doctors' notes as these will be needed.

If the payments to your IVA have become unaffordable for you then you need to contact your Supervisor, who will ask you to complete another income and expenditure form. It might be that he will have to hold a further creditors meeting to consider a reduction in your contributions.

If you know that your monthly payment is going to be late then you must inform your Supervisor as soon as possible, explain why it will be late and when you can make the payment.

Who gets to know about my IVA?

Unlike bankruptcy your IVA is not advertised in a newspaper. Your employer will not know unless you choose to tell them. Your IVA is entered on a public register and this may be picked up by credit reference agencies who will note your IVA on your credit reference file.

What do I do now my IVA has been accepted?

When your IVA has been accepted, you will be asked to set up a standing order to make your agreed monthly payments you normally have 30 days to make your first payment and you must continue to make payments each month, as failure to do this can result in the failure of your IVA.

You can decide on a date that is best for you to make the monthly payment and you can arrange the payment date a couple of days after you get paid to avoid the risk of incurring charges and overspending.

When your first payment has been made, you are heading in the right direction to say goodbye to your debts.

We will review your income and expenditure every 12 months to make sure the IVA is still affordable to you, so make sure you are keeping your payslips and bank statements ready for this review. If your circumstances change before this point then it is important to tell us about this so we can support you through these changes.

We will contact your creditors at this point and advice them of your IVA being approved so any future correspondence can be directed to us and we will deal with it for you.

What if my creditors reject my IVA?

Creditors will not often reject an IVA without providing a reason and we will work with you and the creditor to attempt to overcome this rejection. If we are unable to overcome the objection then you may have an opportunity to change your offer or repropose your IVA if you are able to meet the requirements of the rejecting creditor.

If you are unable to do this then we will discuss your options again and a find a suitable alternative that you feel comfortable with.

What happens if my IVA fails?

If the IVA fails then the creditors will be able to chase you for the remaining debt, as you will no longer have the protection afforded to you by the IVA.

However, you may then reconsider your options and look at an alternative way of repaying your debt.

Why does an IVA fail?

There are many reasons why an IVA could fail, monthly payments may not made or a change in circumstances occur which means there is no money available to pay into the IVA.

If you do experience any problems during your IVA you must inform your Supervisor as they will be able to advise you on the best solution for that particular circumstance. It may be that the IVA can continue under different terms but the Supervisor will need to contact your creditors to obtain their agreement to the change in circumstance.

Different companies are saying they have a better solution than an IVA, what are they?

When you first contacted us for advice all available options would have been considered when you provided your income and expenditure details. The options discussed will have included debt management plans, informal agreements, re-mortgaging, secured loans, bankruptcy and IVAs. Making sure that you receive clear and understandable advice would have been our priority. If it was recommended that you talk to an Insolvency Practitioner about an IVA he must again discuss the all the options to ensure the most appropriate solution is provided for your situation.

An IVA will only be suggested for you if the Insolvency Practitioner believes it is the best option for you, taking into account your situation and the money available after you have paid your essential household costs.

Other companies stating that they have a better solution may not always have the full information required to make an appropriate decision, or be able to consider the full range of options.

What happens when my IVA is completed?

When the IVA has been completed you will be issued with a certificate of completion, it will also be sent to your creditors so they know that the IVA has been completed and the debt to them has been satisfied. It will prove that your IVA has been completed successfully and creditors cannot contact you for money.

You will receive a statement showing all the transactions that have been made, your payments into the IVA and the dividends paid to your creditors and the fees of the IVA.

The Insolvency Service will update their records to show that you have completed your IVA successfully, and you should ask the credit reference agencies to update your file.