Below is a selection of the most frequently asked questions about IVAs. They reflect the most common concerns debtors face.

Click on the question that interests you in the list below to find a text answer by Melanie Giles. Also you can view a video answer to the general questions by clicking on the Video Answer Link next to each general question

QUESTIONS:

Introduction to IVAs

1. Introduction form Melanie Giles
2. What is an IVA?
3. How do I know an IVA is right for me?
4. How does an IVA work?
5. Why is Melanie Giles different?

The IVA Process

1. What’s the timescale of an IVA? Does it take long to set up?
2. How much does it cost? Are there fees?
3. Will I ever have to go to court?
4. Will my creditors still call me up while my IVA is being set up?
5. What happens at a creditors meeting?

Debts and assets

1. Can I clear all my debts with an IVA?
2. Will I lose my home?
3. Will it affect my business?
4. What happens to my Credit Cards?
5. Will my IVA affect my bank account?
6. Will an IVA be affected by a change of financial circumstance?

IVA and other people

1. Do I have to tell anyone I have an IVA?
2. Can I share my IVA with my partner?
3. Will my IVA affect my parents?

ANSWERS:

Introduction to IVAs:

1. Introduction from Melanie Giles:

Hi, I’m Melanie Giles. I am a Licensed Insolvency Practitioner with over 20 years experience in debt solutions. I am a national specialist in personal insolvency and want to help as many people as I can deal with their financial crises.

In this section, you will find the answers to the most common queries and concerns surrounding IVAs.  They will help you get further understanding of what an IVA is and whether the process could be right for you.

If you want to find out more about IVAs please don’t hesitate to give me a call on 02920 277 678 or fill in an enquiry form.

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2.What is an IVA?

An IVA, or Individual Voluntary Agreement, is a formal agreement between you (the debtor) and your creditors.

An arrangement will be officially agreed upon with the people you owe money to, in which it is stated that you will make reduced monthly payments towards the total amount of your debt in order to pay off a percentage of what you owe. Generally, after 5 years of these payments your debt is classed as settled and any remaining debt is cleared.

The agreement is formal and acknowledged by the courts and a licensed professional called an Insolvency Practitioner deals with your case.

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3.How do I know an IVA is right for me?

If you have a regular income and therefore can make regular payments, an IVA may well be right for you.

Before you begin any debt solution process an expert such as myself will asses your financial situation along side your personal situation (i.e. whether you are married, have children, own a house etc). They will help you to decide what financial plan is appropriate to you.

The main benefits of an IVA include:
- You do not have to declare yourself bankrupt
- You do not risk losing your house or assets.

1. During the course of your IVA, your creditors will not be permitted to contact you as they will have agreed to receive the monthly amount as set out in your Insolvency Agreement.
2. The affect on your credit rating is also less damaging that bankruptcy.

However, as with any debt solution, it is important that you do your reading before you decide to begin the process. An IVA can be a great solution to your debt problem but make sure you know what you are getting in to before you sign anything.

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4.How does an IVA work?

An IVA is a process which aims to have you debt free, usually after a period of 5 years. It involves a signed agreement with you and your creditors in which you promise to pay an agreed monthly amount to your creditors for 5 years. This amount is you pay is the amount left over if you subtract all your outgoings (such as bills, rent, food, clothes etc) from your total income. This means you pay back what you can afford. The minimum amount you can pay is £200.

A bank account is set up for your payment to go into each month and this money is used to pay your creditors. Your creditors agree to receive the promised amount and not request any more. At the end of the 5 year process, when your IVA comes to an end, the rest of your debt is written off by your creditors. Unlike some other debt solutions, an IVA is legally binding.

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5.Why is Melanie Giles different?

Melanie is different because she is not an IVA factory. She deals with all her cases personally and will not charge you as soon as you pick up the phone. She works to get the best debt solution for you with an awareness of your personal situation.

Her 20 years experience means that she has seen almost everything when it comes debt so she is impartial and yet knowledgeable and passionate when it comes to her cases.

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The IVA Process

1.What’s the timescale of an IVA? Does it take long to set up?

The entire IVA process generally takes 5 years to complete.

In addition, it usually takes between 2 and 3 months to get your IVA set up.

This set up period includes:

1. Your first meeting with your Insolvency Practitioner
2. The arrangement of all your financial papers, also know as a Statement of Affairs (SOA)
3. The putting together of your personal proposal by your practitioner using your financial documents
4. The receipt of your personal IVA number from your local court
5. The sending out of your complete proposal to all your creditors
6. Awaiting the response from your creditors and their signed copy of your proposal
7. The final go ahead for the beginning of your IVA payments, including the setting up of a bank account for your monthly payments to go into.

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2.How much does it cost? Are there fees?

Fees vary according to who you take your IVA with. However, your IP should make it very clear how much you will pay monthly towards the fees. The debtor usually faces two sets of fee when an IVA arrangement is established: a nominee fee to set up the arrangement and a supervisor fee, for delivering your payments to the creditor.  The amount your IVA provider receives for doing this is agreed with your creditors and doesn’t affect what you pay; it is included within your monthly payments.

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3.Will I ever have to go to court?

Generally, no. You will receive an IVA number from your local court, but the process will occur outside the court room.

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4.Will my creditors still call me up while my IVA is being set up?

Your creditors should be aware of the IVA procedure and so therefore they shouldn’t call you while it is being set up. Once your IVA is in place the creditor phone calls stop and your IP will help you to deal with this. The creditors will desist from calling you concerning your debt once your IVA is underway because the IVA is a legal agreement that has been signed by all your creditors agreeing to the process and to longer contacting you directly. As you are now paying back your debts in a regular manner they should no longer need to contact you. If they need to be in contact with you they should communicate with your Insolvency Practitioner who will in turn speak to you if necessary. 

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5.What happens at a creditors meeting?

After your proposal has been completed and posted to every known creditor, a Creditors Meeting will be called. This cannot be held until 14 days after the creditors received their copy of the proposal so that they have sufficient time to consider the documentation and their intended course of action.

The Creditors Meeting is an opportunity for your creditors to raise any queries about the proposal should they have any. They may suggest changes to the proposal if they so wish. Before the proposal can be signed all the creditors have to be happy with the proposal and any changes that were suggested.

Most often, an actual Creditors Meeting will not occur. Frequently creditors will just post their response to the proposal or send a representative to the meeting to discuss it. The next step of the IVA process cannot go ahead until all the creditors have responded to the proposal and 75% have signed agreeing to the proposal. The voting power of each creditor is measured according to how large the debt owing to them is.

The debtor can back out of the IVA, up until the point in which all the creditors have signed the proposal. If the debtor does back out, this usually means embarking on bankruptcy.

The meeting is generally concluded by the Insolvency Practitioner declaring that the proposal has been agreed upon and that everyone will be notified of all changes. The chairman of the meeting will also file a report on the meeting. The Insolvency Practitioner will now be seen as the supervisor of the IVA. Occasionally the creditors will ask for a different representative but this is rare. The supervisor will monitor the process of the IVA over the course of the 5 years, ensuring that payments are made and that both parties are happy.

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Debt and assets

1.Can I clear all my debts with an IVA?

You can generally clear any unsecured debts with an IVA. These include the following:

1. Store cards
2. Catalogues
3. Credit cards
4. Personal loans
5. Overdrafts
6. Outstanding balances after home or vehicle repossession
7. Business loans for which you are personally liable

However, some debts are not able to be included such as secured debts, rent and council tax, parking fines and large student loans

You can still include your student loan in an IVA application, but if their debt represents more than 25% of the aggregate debt they will likely reject.

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2.Will I lose my home?  

An IVA protects you from having to sell your home, but you may be required to release available equity from it via a re-mortgage. If you have part ownership of your home, you will only be required to release the proportion of your part of the equity a re-mortgage will allow. The IVA protects you from having to sell the property.

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3.Will it affect my business?

Unlike bankruptcy, with an IVA there is no requirement to tell your employer or employee(s) about your financial status. An IVA is not Bankruptcy; therefore you are able to continue as a director in a business. Also professional license holders are able to continue practicing. Partnerships can also continue to trade, and because the IVA is a private agreement, your employer will not be informed. Unlike with bankruptcy, those in the police force are also able to take out IVAs without it affecting their careers.

However, your name will appear on the insolvency register which is available online.

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4.What happens to my Credit Cards?

You will usually no longer be able to use your credit cards. This is because when you enter an IVA you make an agreement to pay off the debts on them, and so they are often frozen during the IVA process.

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5.Will my IVA affect my bank account?

You may find that you are only able to have basic banking facilities and you will only be able to set up a basic account with banks other than your creditors.

The main features of a basic bank account include:

1. No overdraft
2. No credit cards
3. Can set up direct debits
4. Can set up standing orders
5. Can set up internet banking.

It is also advisable to speak with the bank personally rather than online and set up your basic bank account before your IVA has been accepted.

You may also find that some banks will charge you fees for their banking facilities, but as some don’t, it’s best to persevere and find one that doesn’t charge.

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6.Will an IVA be affected by a change of financial circumstance?

During the course of an IVA, if you receive any windfall of funds (e.g. Lottery wins) you will be expected to pass over the net proceeds to your creditors, through your Insolvency Practitioner who has been monitoring your IVA process.

In the event that you have gained enough money to pay off all of your IVA, you must inform your Insolvency Practitioner who will suggest this to your creditors. Usually they all agree to the offer.

Your IVA and financial circumstances will be assessed at the end of each year, it is important to inform your IP of any changes to your financial situation. If, for example, you have received a pay rise then your monthly payments will be changed accordingly to an amount that is mutually beneficial to you and your creditors. If the amount your income has raised is insignificant this will usually not affect your monthly payments. But you must inform your IP of any changes.

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IVA and Other people

1.Do I have to tell anyone I have an IVA?

It is up to you whether you tell anyone about your IVA. However, we recommend that you do tell your family members, as they can support you emotionally and it may make things more complicated if they were to find out accidentally. Remember also that you will be on the Insolvency Register, which is available online.

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2.Can I share my IVA with my partner?

No, however you both may enter separate IVA agreements. There is not a joint IVA but two can run together side by side which means income, expenditure etc. are all calculated together and there is only one monthly payment, but they are still in effect two separate IVAs and have to be agreed by creditors separately.

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3.Will my IVA affect my parents?

Your IVA will not affect your parents unless they are one of your creditors. In this situation, you are able to include them on your IVA proposal in order to pay back your debts to them. They will be treated as normal creditors and be sent your proposal and be required to sign it for the Creditors Meeting.

However, it should be noted that if you live with your parents, who are not your creditors, it is advisable that you inform them of your situation as during the IVA setting up process you will have to explain all your incomings and outgoings which you may need their help for.

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Call Melanie Giles on 02920 277 678 or please fill in an IVA Enquiry Form.