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IVA Questions

1 What is an Individual Voluntary Arrangement? 2 What will an IVA cost? 3 Are there any additional fees after my monthly contributions to my IVA? 4 Is an IVA the best option? 5 Will I lose my home? 6 What happens if only some of my creditors agree? 7 Is the IVA registered on your credit file? 8 Are there any disadvantages to an IVA? 9 How will this affect my credit rating?

Answers

1 What is an Individual Voluntary Arrangement?

An IVA, or Individual Voluntary Arrangement, is a formal contract between you and your creditors. It is an alternative to bankruptcy. The terms of your proposal may be flexible, and the creditors may be keen to enter as they view their chances of recovering their money as higher, compared to a bankruptcy. Your chosen IP (Insolvency Practitioner) will advise you with this proposal, and in turn, become your "nominee". If an IVA is refused by your creditors, they have the right to bankrupt you.

2 What will an IVA cost?

Unlike many of our competitors offering debt management services you will not have to pay anything up front to us. The proposal will contain details of what is being paid to the IP for acting as nominee and supervisor. All fees are agreed prior to the arrangement concluding, and are included in the repayment plan.

3 Are there any additional fees after my monthly contributions to my IVA?

No. All the fees and costs of the arrangement are fixed, and will be met from the monthly payments you pay for the IVA. For example, if you owe £20,000 and the IVA is set up on the basis that you pay £240 per month for 60 months this is all that you will repay. The costs of the arrangement will be paid from your monthly payments of £240 and the balance will be paid to your creditors.

4 Is an IVA the best option?

IVA's have different consequences for different people. A professionally qualified person, such as a solicitor, may have his practice suspended because of a bankruptcy, so is more likely to seek an IVA. You should choose a debt management company to advise you on the best plan to suit your situation. Being as open and honest as possible will enable your nominee to be accurate in his advice.

5 Will I lose my home?

Your home will be protected from being sold when you enter into an IVA, and creditors will no longer be able to take court action. Before the end of the IVA it may be necessary to release some of the equity in your home. If you have difficulties doing this, the creditors will accept a reduced amount if that is all you can afford or creditors may agree that the arrangement shall be extended for up to 12 months and income contributions be paid in place of obtaining the remortgage.

6 What happens if only some of my creditors agree?

An IVA is a legally binding contract which means that if the creditors that hold 75% of the value of the debts vote in favour then the remainder of the creditors have to agree by law.

7 Is the IVA registered on your credit file?

When the IVA is approved it is registered on your credit file which means that if anyone does a credit search against your name the search will disclose you have entered into an IVA. This can sometimes be looked upon favourably.

8 Are there any disadvantages to an IVA?

When the creditors agree to an IVA, they may propose that you pay more than you would should you file for bankruptcy, and you need to be confident you will be able to meet the payments. If you fail to make a payment your creditors will be able to claim the whole of the original debt plus any costs that may be occurred. You will also no longer be bound by the arrangements and in many cases this can lead to bankruptcy.

9 How will this affect my credit rating?

You will be able to get credit after you have entered into an IVA, and even during the process of an IVA, you may need, however, the approval of the supervisor of the IVA. Your credit rating will be affected by the IVA, however, if you wished to remortgage your home in order to obtain a better rate of interest, this is possible 12 months after you had entered into the arrangement, providing you have kept up to date with the payments.