Questions:

• IVA
• What are the benefits of an IVA?
• Is an IVA suitable for me?
• Can I apply for an IVA?
• Will the IVA affect my credit rating?
• Do creditors have to accept an IVA?
• If I am a homeowner, will I have to release equity in my home into the IVA?
• The Effect of failure of an IVA
• Requirements to Maintain an IVA
• How much will I have to pay each month?
• What will you need from me to commence work on my application?
• What if my creditors don't agree?
• What if my creditors aren't all in favour?
• Will my credit rating be affected?
• How long will an IVA last?
• Can I cancel an IVA?
• What if the IVA fails?
• How much will it cost?
• What do the fees cover?

Answers:

• What are the benefits of an IVA?
  

  Depending upon your circumstances you benefit from:

  • Any unpaid balance of your debts written off – as much as 75%.
  •  One affordable payment which usually lasts for 5 years.
  • All interest and charges on your debts will be frozen.
  • You will be protected from further court action.
  • All contact from your creditors will cease.
  •  Your monthly contribution is based on what you can realistically afford.
  • IVA’s unlike bankruptcy will not be published in your local newspaper.
  • It will not affect you job in any way i.e. if you are a police officer or in the armed forces. *(subject to contract)

  IVAs have become increasingly popular over the past few years for those who find themselves over committed financially. Last year over 15,000 people entered in to an IVA and are now on their way to becoming debt free and stress free.

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• Is an IVA suitable for me?
  

  An IVA is suitable for a person who is finding it increasingly hard to pay their monthly credit commitments, but who have assets that under bankruptcy they would lose. In an IVA you will not lose any assets such as your house, they are protected by the IVA from your creditors although they may request that you release any equity if applicable. If you have no assets then an IVA can present better results to your creditors than in bankruptcy.

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• Can I apply for an IVA?
  

  You do need to meet certain criteria if you want your IVA to be accepted, which are:

  • At least 4 separate creditors.
  • A minimum debt level of £15,000.
  • A minimum monthly contribution of £200, depending on debt level.
  • Be in full time employment. 

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• Will the IVA affect my credit rating?
  

  Because an IVA will result in you not making contractual payments on your unsecured debts, you should expect that your credit rating will be adversely affected by going into an IVA. However, your credit rating may have already been affected if you have missed or made late payments. An IVA is a formal legal agreement and will affect your credit rating for up to 72 months after completion. Homeowners may be required to re-mortgage in the 5th year of the IVA.

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• Do creditors have to accept an IVA?
  

  The decision to accept or reject an IVA is made by a vote of your creditors at a creditors meeting. You need to get 75% acceptance by debt value at that meeting for the IVA to go ahead. If less than 75% by debt value vote to accept the IVA, the IVA will fail.

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• If I am a homeowner, will I have to release equity in my home into the IVA?
  

  You may have to release a proportion of any available equity in any property you own as part of your overall contribution to your creditors. This will usually happen after the 4th year of the IVA.

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• The Effect of failure of an IVA
  

  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. There is also the risk that Creditors or the Insolvency Practitioner could petition for your bankruptcy

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• Requirements to Maintain an IVA
  
  • You will be required to agree to the full term of the IVA – dependent on circumstances.
  • All assets must be declared, if you own assets of excessive value your creditors can ask that they be realised for their benefit.
  • It may be necessary to release some of the equity in your property in the 4th year of your IVA.
  • You must declare any windfalls, inheritance or pay increases to your (supervisor) Insolvency Practitioner.
  • If you bank with one of your creditors you will need to open a new bank account. 

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• How much will I have to pay each month?
  

  This all depends on your circumstances; your monthly contribution is based on your entire household income and expenditure, therefore will be affordable for you. You will be required to set up a standing order with your Insolvency Practitioner, which will be paid in to your IVA account and distributed to your creditors.

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• What will you need from me to commence work on my application?
  

  Your proposal for an IVA is based on information about your assets and your monthly income and expenditure, this will be carried out by an experienced IVA advisor.

  The information we require in order to assess your suitability for an IVA is:

  • A recent statement from each of your creditors showing balance, account number and the address.
  • 3 months recent wages slips (consecutive).
  • Valuation of property (if you own your own house)
  • Details of any secured loans and a recent mortgage redemption statement
  • Full details of all household income and expenditure.
  • All unsecured creditors must be added to your IVA – whilst in an IVA you must not have any credit commitments other than your secured borrowings.

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• What if my creditors don't agree?
  

  If 75% of your creditors are in favour of your IVA proposal it will be approved. If it is approved the other 25% of your creditors will be legally bound to the arrangement as well. During the negotiations creditors can suggest modifications to the proposal and you can choose whether to accept them or not.                    

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• What if my creditors aren't all in favour?
  

  If your creditors don't all vote in favour you still have the option of a Debt Management Plan or bankruptcy. 

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• Will my credit rating be affected?
  

  If you undertake an IVA, you will have to give up all your current credit (e.g. store cards and credit cards) and you will not be allowed to take additional unsecured borrowings. However, this situation will only last until your IVA is completed. An IVA will affect your credit rating in the short to medium term.  The IVA will be removed from your credit rating one year after the IVA finishes (6 years after it started) which offers you further protection as you won’t be able to get into the same situation again.

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• How long will an IVA last?
  

  This can vary, but it usually lasts for 5 years, the term will be agreed to at the proposal stage of an IVA.

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• Can I cancel an IVA?
  

  You can cancel an IVA but you will have to deal with your creditors direct and they may petition for your bankruptcy.

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• What if the IVA fails?
  

  It is unlikely that an IVA will fail as all the provisions will have been thought through at the initial stages when preparing the proposal but in the event an IVA fails because your circumstances worsen your creditors do have the option to petition for your bankruptcy. There are limited benefits for creditors to do this as they would lose all the monies owed it is more likely that you would be offered a debt management plan.

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• How much will it cost?
  

  At Debt Advisory Line we are clear about our charges for the service provided. Your first three monthly payments and an administration fee is an initial cost of setting up your IVA and are not paid to your creditors. During this set up period  we will contact your creditors and inform them that we are compiling a Statement Of Affairs ready to submit your application for an IVA. Your creditors will place your account in arrears or further into arrears.

  The set up fee includes:

  • A completed Statement of Affairs
  • A Completed Comparison Statement
  • A full assessment of your financial statement
  • Appointment of a dedicated Case Officer
  • Liaising with your creditors by telephone or in writing informing them of your intention of starting an IVA
  • Calculation and distribution of the reduced payments (dividends)

  The set up fee is non refundable, however we provide a 7 day “cooling off” period giving you peace of mind that you have made the right decision. If you change your mind within 7 calendar days of making your first payment we'll refund your payment.

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• What do the fees cover?
  

  Debt Advisory Line offers a specialist IVA service which is built around your circumstances and your needs. By calling our free phone telephone number you will speak to an experienced and fully trained Advisor who will take you through a detailed assessment of your financial circumstances and provide you with the best debt solution for your needs.

  Throughout the duration of your IVA your dedicated Case Officer will review your circumstances ensuring that you have complete peace of mind.

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