IVA Questions

The basics of an IVA explained by our experts

An IVA is a legally binding arrangement supervised by a Licensed Insolvency Practitioner, the purpose of which is to enable an individual, sole trader or Partner ("the Debtor") to reach a compromise with his creditors and avoid the consequences of bankruptcy. The compromise should offer a larger repayment towards the creditor’s debt than could otherwise be expected were the Debtor to be made bankrupt.

Please note that IVA team receive 1000s of calls from the public with IVA questions. Please find below some of the IVA questions that come up every day.

IVA questions 1 - Why should I choose an IVA?
When deciding whether to choose an IVA you must consider the implications and also think about what an IVA will ultimately do for you.

If you choose an IVA you will have one affordable payment to make each month instead of several to make at different interest rates.
If you choose an IVA you can legally write off up to 75% of your debts.
If the creditors choose to accept the IVA you can be debt free (subject to terms and conditions) in 5 years (may be 6 years max)
All the interest and charges will be legally halted if you choose an IVA.
If you choose an IVA then all letter and phonecalls from the creditors will be dealt with by the IP.

IVA questions 2 - What will an IVA cost?
The cost of an IVA will be incorporated into the IVA monthly payments made. The monthly amount paid into the IVA will cover the payments to your creditors as well as the cost and fees for carrying out the IVA. Please note that if the IVA fails at creditors meeting or you change your mind we you will not have to pay any cost or fees for this work whatsoever.

IVA questions 3 - Will I lose my home, house or property in an IVA?
If you are living in rented accommodation, there is no risk to your home in an IVA. You should however, check your tenancy agreement to ensure that the Landlord does not have a clause about tenants entering into an IVA. If you live in mortgaged property, your creditors will want details of any equity that you have in the house. Equity is the difference between the value of your house and the amount of the loans secured against it. As part of the IVA process, the Insolvency Practitioner will ask you to have your house valued. Your creditors are entitled to up to 75% of your share of the equity. You may be asked to release this money for the creditors benefit within the 5 years. This could be via a re-mortgage.

If you cannot find the answer to your IVA questions please click in the following links:

IVA guide
IVA Knowledge Base

IVA questions 4 - Can I still obtain a mortgage with an IVA?
Please note that because personal credit is affected with an IVA you can still obtain a mortgage, the only difference is the lending rate will be higher People with IVA are treated as “sub prime". A sub-prime lender is one who lends to borrowers who do not qualify for loans from mainstream lenders. Some are independent, but increasingly they are affiliates of mainstream lenders operating under different names.

IVA questions 5 - Is the IVA registered on your credit file?
Yes, the IVA will definitely be registered on your credit file. At the end of the IVA you will be issued with a letter of completion and a certificate of compliance stating that the Voluntary Arrangement has been successfully finalised. This can then be shown to any third parties who may enquire concerning your credit file.

IVA questions 6 - What happens if I come into money whist I am in an IVA?
If you come into money once you are in an IVA you should contact your IVA Insolvency practitioner as soon as possible with the information.
All recent properly drafted IVA proposals have clauses about windfalls. A windfall is sudden unexpected profit uncontrolled by the profiting party.

IVA questions 7 - Can I include family members that I owe money to in an IVA?
If you borrow from friends and family and then propose an IVA, you could lose their friendship and support – which should mean much more to you than the sum borrowed in the first place. Normally for an IVA to be approved, a majority of 75 per-cent of the vote is required in pounds. Where there are lots of family debts or connected party debts there is a second vote. In this second vote out of the 75% that vote for the IVA if there is more than 50% of the 75% is to family or connected parties (such as then the IVA will fail.

IVA questions 8 - Can I still have a bank account with an IVA?
If you are considering an IVA then we advise opening up a new basic bank account with an creditor you are not in debt with or one who is not on your IVA creditors list. When you are in an IVA you are not supposed to incur further debt or apply for credit. A basic bank account for someone with an IVA is one which just offers basic banking facilities with no overdraft facility or other type of lending facility.

IVA questions 9 - How do I settle my IVA early?
A person can settle an IVA early by offering the creditors an amount of money to conclude the arrangement. The amount provided to settle the IVA early does not have to be payment in full but should be enough to 'wet the beak' of the creditors. The IVA creditors are very reasonable and are always open to an offer, especially if it means the debts can be settled early.

IVA questions 10 -Will an IVA affect the people I live with?
In theory because your IVA is in your name it will not affect the people you live with. The whole credit reporting system has been modified so that other people who you live with credit or personal information is not mixed up with the person’s credit being searched.

If you cannot find the answer to your IVA questions please click in the following links:

IVA guide
IVA Knowledge Base

IVA questions 11 - Can self employed people do an IVA?
Yes, the requirements are exactly the same as if you were employed-

You must have the desire to pay your creditors as much as you can afford a 5 year IVA at the most.
You must be able to make regular IVA monthly contributions.
You must have a viable business to propose a self employed IVA.
Your business must be capable of making profits to prove you can afford to do an IVA
You must keep up to date with the filing of all post-IVA tax and VAT returns
You will need to show your Trading accounts for the last 3 years (if applicable).
Your will need to show your latest tax returns
You will need to provide a cash flow forecast for the next 2-5 years.

IVA questions 12 - Can I get an IVA while living abroad?
The basic rule on an IVA whilst living abroad is you must have been UK domiciled within the last 3 years.

IVA questions 13 - I am a professional person will it affect my position with an IVA?
If you are considering entering into an IVA, then it would be wise to check with the professional organisation that you are a member of first, to see if this will have an effect on your accreditation. Professionals who run into financial trouble typically opt for an IVA because if they choose bankruptcy they are not allowed to be involved in promoting, forming or managing a company without the permission of the court. They are also likely to lose professional accreditation if they work in careers, such as accountancy.

IVA questions 14 - Will an IVA become public knowledge?
Please note that an IVA is a private arrangement between you, your creditors and the IVA Insolvency Practitioner. The only people that will be aware of the IVA are your creditors. Some people don’t even tell their husband or wife about the IVA. The IVA is very different to bankruptcy as it is not advertised or published in 2 local papers and the London Gazette. Please note that your employer will not find out about your IVA unless you tell them.

If you cannot find the answer to your IVA questions please click in the following links:

IVA guide
IVA Knowledge Base

If you wish to discuss the Individual Voluntary Arrangement (IVA) procedure and understand how it can help you please complete the following form or telephone freephone 0800 074 6918.

IVA Knowledge Base Menu

ENQUIRY FORM

Name

House Name or No.

Postcode

Email address

Telephone

Mobile

Best time to call

Amount of debt

Employment Status

Are you a home owner?
Yes | No

Other Info

I accept the privacy policy:

We will get back to you soon!

IVA's

The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.

In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]

What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
[more...]

Debt Analyser

We can help you decide the best option to start clearing your debt.

Complete the form and get answers now.

IVA Questions

The basics of an IVA explained by our experts

IVA Knowledge Base Menu

ENQUIRY FORM

FREEPHONE DEBTLINE

IVA's

BANKRUPTCY

CREDIT REPAIR

DEBT ADVICE FACTSHEETS

DANGER

MIS-SOLD PPI HELP

Debt Management Plans

Individual Voluntary Arrangement (IVA)

Bankruptcy Advice & Support

Debt Advice for Scottish Residents

Mortgage Help & Advice

Claim Unfair PPI & Credit Card Charges

Business Rescue Service

Budget Calculator & General Debt Advice