Common IVA Questions
Common questions answered about IVAs. If you have a query not covered here, please call us for confidential advice about your own set of circumstances.
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1. Are some creditors less likely to approve an IVA than others ?
Yes. Presently, Northern Rock vote against all IVA propsals. If more than 25% of you debt is with Northern Rock you can't do an IVA at this time. Also, HSBC are currently demanding a 40% minimun dividend, rather than the normal 30%.
static link to this question: clear-your-debt.co.uk/IVA420.asp2. Are the terms of an IVA always fixed for the duration of the IVA ?
No. Anyone on an IVA will be subject to an annual review, conducted by the IVA supervisor. If the Debtor’s circumstances change during the IVA, then the terms of the IVA may to altered to take these changes into account. For example, an increase in income may result in IVA payments having to increase.
Typically 50% of any extra income not included in the original IVA proposal will be required to be paid into the IVA. This will depends on personal circumstances; for example, the break up of a marriage may impact household income, which would be taken into account.
3. Are you regulated ?
Our licensed Insolvency Practitioners are regulated by either:-
- Association of Chartered Certified Accountants (ACCA)
- Institution of Chartered Accountants of England and Wales (ICAEW)
- Department of Trade and Industry (DTI)
- Insolvency Practitioners Association (IPA)
4. Can an IVA be settled early ?
Many IVAs end early with the introduction of a lump sum of money. We can arrange a variation meeting to offer a sum of money in full and final settlement of your obligations under the IVA. The new funds are typically raised by remortgage, inheritance, cashing in of policies etc. Creditors do support early settlements as they generally prefer to receive their money early than wait for payments over a five year period.
static link to this question: clear-your-debt.co.uk/IVA701.asp5. Can anyone with debts apply for an IVA?
No, you must be technically insolvent. There are two basic tests of insolvency.
- Your liabilities (debts) are greater than your assets.
- You are unable to pay your debts as they fall due.
If only the second point applies, then an informal debt management plan or a home equity release would be the most appropriate course of action to reduce your current debt repayment levels.static link to this question: clear-your-debt.co.uk/IVA1100.asp
6. Can I arrange an IVA directly with my creditors ?
No. The arrangement takes the form of a contract that is legally binding. One of the key components of this is that your proposal of repayment is handled by a Nominee and the ongoing maintenance of the payment schedule is the responsibility of a Supervisor. In most cases the same Insolvency Practitioner will fulfil both of these roles.
static link to this question: clear-your-debt.co.uk/IVA280.asp7. Can I cancel the IVA once it is set up ?
An IVA is a legal process. Once it is set up it cannot be cancelled because you have changed your mind.
An IVA can be bought to a early conclusion by the introduction of capital from a third party, inheritance, remortgage etc. If you fail to keep you with the agreed payments into the IVA, then your IVA supervisor may initiate legal proceedings against you they could ultimately result in bankruptcy.
8. Can I do an IVA without affecting my Property/House ?
In some circumstances your home may be excluded from the arrangement. However, if you have equity in your house, this will be taken into account when making an offer to creditors. You may have to release some of the equity in your property at some stage during the IVA.
Your creditors are only going to approve an IVA if they consider they will get more money back than via bankruptcy. If the equity in your property is more than your unsecured debts, then they could get it all back by bankrupting you, and forcing you to sell your home.
How your homeowner status effects yout IVA propsal is complex and depends on many factors such as
- Your current mortgage repayments.
- How much of the property is yours in the case of joint ownership.
- The amount of equity in the property.
9. Can I enter into an IVA if I have already received a Statutory Demand ?
Yes, although we recommend that you contact us as soon as possible. We would apply for an "Interim Order" to the court, which is a request to suspend all legal action until the result the creditors meeting is known.
static link to this question: clear-your-debt.co.uk/IVA370.asp10. Can I keep my car while on an IVA?
It depends on the car and your circumstances. This is the case for all high value assets. It is normal to be allowed to keep a car worth a reasonable amount, especially if needed for work or family commitments. The conditions are not as strict as with bankruptcy.
For cars on Hire Purchase, this debt is secured and therefore can't be included in the IVA, the HP company will simply repossesses the car if your do not maintain payments.
Normally you will be allow to keep making HP repayments while on the IVA, however once payments are completed, you will be expected to make increased payment into the IVA now that your outgoings are lowered.
It may be the case that you decide to cut your losses and return the car to the finance company. In this case the outstanding balence is not longer secured and can be included in an IVA propsal.