Individual Voluntary Arrangement FAQs

If the bank that you maintain your current account with is a creditor you will need to open another ‘basic’ account with an unrelated bank. You should set about this without delay and transfer all of your direct debits to the new account together with your wages or salary if this is paid directly into your bank account. If you have an overdraft or loan with your present bank it is likely that your account will be frozen when they become aware of your financial position.

Unsecured creditors’ would consist of credit card debt, personal loans, bank or other guarantee, loans from friends or family or any other loan where a charge on property or other security has not been provided.

Up to the point of the creditors’ meeting (when the IVA is formally approved) the Insolvency Practitioner is referred to as the Nominee. From the date of the creditors’ meeting he is referred to as the Supervisor.

This should be safeguarded under an IVA. Exactly what is included within your proposals to creditors’ depends of the level of equity that you own. Your creditors’ will expect your property equity to be taken into account within your proposals. This is an area we will discuss carefully with you. Often, it is agreed with creditors’ that the property is revalued (usually in year 4 of the arrangement) and at that time you use your best endeavours to obtain a remortgage. If you cannot obtain a remortgage at that time, creditors’ usually agree that the monthly contributions continue for a further year instead of the equity being released.

In most cases you would retain your car. After all, if you did not have your car it may be much more difficult or impossible to continue to work. Only if the car is particularly valuable may the creditors’ insist that it is sold and replaced by a cheaper vehicle.

As with bankruptcy, most creditors’ will be uninterested in your personal belongings unless you have any items of high value such as works of art or valuable antiques. Should you think you may have any such items you need to advise us?

You need to live in England, Wales or Northern Ireland. Often £15,000 is stated as a minimum amount but this is not a rigid figure. Similarly, it is often stated that you need a minimum of 3 creditors’ but an IVA may be suitable where there is only one creditor. We will guide you as to your best option.

Yes, you can. In addition to all the usual rules you will also need to produce a simple budget for your business showing your anticipated profits for the next year. Of course, we will guide and assist you.

So long as the IVA is properly drafted, which it will be if you engage us there is a strong likelihood that creditors’ will accept your IVA. In 2010 the figure for accepted IVA put forward by G&K was 90%. In 2011 the corresponding figure is 92%.

Costs of the IVA will be explained to you in detain before any commitment to the IVA is made by you. Usually, it is agreed with creditors’, that the costs are included within the monthly contribution that you make. Therefore you have no additional charge for our charges to the IVA.

Usually, this takes 4-6 weeks for us to finalise your proposals when they would be approved by you and forwarded to creditors’. A further 2 weeks’ notice has to be given to creditors’ before the creditors’ meeting. So in total, it usually takes 6 to eight weeks. If there are any reasons why this process needs to be fast tracked, we will. It is important you let us have information we request as soon as possible as any delays are likely to lengthen the process.

If your circumstances change it may be possible to agree a variation with the creditors’ at a reduced contribution, either temporarily or permanently. The important thing is to speak to us as soon as you are aware of any problems.

Your credit rating will be affected by the IVA and you will need to discuss any intended seeking of credit during the IVA with us. The record of the IVA normally stays on your credit history for one year after the conclusion of the IVA.

Yes, a director of a company can be subject to an IVA. This office is prohibited for an undischarged bankrupt.

Unlike bankruptcy, you are not prohibited from public office. Certain professionals (for example, Chartered Accountants or Solicitors) can also continue to practice with the approval of their professional body which would not be possible if they were bankrupt.

This all depends on your individual circumstances and will be fully discussed with you. The norm is for a period of 5 years but this can be shorter in certain circumstances – for example if you are retired or close to retirement or if a lump sum payment is being proposed.

There are two fees payable to an Insolvency Practitioner for the work involved in an IVA, these are deducted from the monthly payments you make.

The first fee charged by the insolvency Practitioner is for setting up the IVA – known as the Nominee fee, the second fee charged by the insolvency Practitioner is for administering the IVA over the agreed term.  This fee is known as the Supervisor fee.  Please see our client examples below: –

Case 1. Nicola

• Nicola owed creditors £24,000 (cards & loans)
• It was evidenced that Nicola could pay 60 payments of £250 (£15,000, which was 62% of the original debt)
• Nominee’s Fee: £1,250
• Supervisor’s Fee: £2,193
• Nicola paid creditors £11,557 over 5 years.
• Creditors received 48.55% of the amount they were owed and 51.45% was written off.

 

Case 2. Keith

• Keith owed creditors £25,300 (Credit Cards, Store Cards & Loans)
• It was evidenced that Keith could pay 60 payments of £200 (£12,000 which was 51.51% of the original debt)
• Nominee Fee: £1,000
• Supervisor’s Fee: £1,707
• Keith paid creditors £9,293 over 5 years.
• Creditors received 35.45% of the amount they were owed and 64.55% was written off.

 

Case 3. Reza

• Reza owed creditors £39,200 (Credit Cards & Loans)
• It was evidenced that Reza could pay 60 payments of £330 (£19,800 which was 50.51% of the original debt)
• Nominee Fee: £1,650
• Supervisor’s Fee: £2,895
• Reza paid creditors £15,255 over 5 years.
• Creditors received 39.21% of the amount they were owed and 60.79% was written off

 

Case 4 –Simon & Sally – Interlocking & third party funds.

• Simon & Sally owed creditors £46,000 (Loans & Credit Cards)
• Due to jointly held debts an Interlocking IVA was proposed
• Third Party Funds of £10,000 were proposed In Lieu of property equity (21.74% of the original debt)
• Nominee Fee: £1,500
• Supervisor’s Fee £1,500
• Simon & Sally paid creditors £7,000 over 18 months.
• Creditors received 14.93% of the amount they were owed & 85.07% was written off.

 

Fees would be fully explained prior to you proceeding with an IVA and will also be disclosed in your IVA proposal which is sent to your creditors.

It is important to note that no additional costs to you other than your agreed monthly IVA contribution.

The debt write-off amount for each customers differs depending upon their individual financial circumstances and is subject to approval by their creditors.

Writing off debt with an IVA will affect your credit rating See frequently answered questions

An IVA may not be suitable in all circumstances. Fees apply. Entering an IVA will affect your credit rating.

If you have unsecured debts of at least £15,000, have a regular household income, and live in England, Wales, or Northern Ireland, an IVA may be the option for you.

The IVA normally stays on your credit history for one year after your IVA ends.

• Freeze all interest and charges
• Write off unaffordable debt
• One monthly payment you can afford
• Stop creditors contacting you

Debts usually included & Debts usually not included in an IVA.

Debts usually included in an IVA:            

• Catalogues
• Personal Loans
• Council Tax arrears
• Overdrafts
• Credit Card Bills
• Gas & Electric arrears
• County Court Judgements
• Water Bill arrears
• Payday Loans
• Store cards
• Income Tax & National Insurance arrears
• Tax Credit or benefit overpayments (unless obtained by fraud)
• Any other bills

 

Debts usually not included in an IVA:

• Mortgages & secured loans
• Hire purchase agreements
• Court Fines
• TV Licence arrears
• Student Loans
• Social fund loans
• Child support arrears