IVA Frequently Asked Questions

This FAQ is intended for those considering an IVA.

For answers to questions more likely to be asked by existing IVA clients, please see IVA Client Support

1. How much am I expected to pay into my IVA each month?

We will look into your household income (take-home pay and benefits) and expenditure (the cost of living i.e. food, utility bills and secured lending).

No account has been taken to repay your unsecured debts at this stage. By deducting your expenditure from your income you are left with an amount (often called a disposable income) which is all you have left to service your unsecured debts.

In the example below, we would expect you to make a monthly contribution to your IVA of £200 to repay your unsecured creditors.

2. Will I lose my home?

No. Unlike in bankruptcy you will not be required to sell your share in your home nor sell other assets to be shared amongst your creditors. Under an IVA, your mortgage, and any other secured payments, will be prioritised, which means we will ensure that you repay them before your IVA contributions are taken. Therefore your home is protected.

3. Will I live in poverty while the IVA is running?

No. You will be allowed to retain such proportion of your income as necessary to meet the reasonable domestic needs of you and your family. Typically this would include food, clothing and household items, rent/mortgage, travel (including car ownership costs), all utility bills, insurance, TV and phone, schooling and childcare costs. It is a matter for negotiation between you and your creditors exactly as to what this will comprise, but creditors will expect you to live fairly economically while the IVA is in place. It is unlikely that they would wish to see money set aside from your income for foreign holidays, a new car or home improvements. Expenditure levels are set by commonly accepted guidelines.

4. How long does it take to set up my IVA?

The IVA process is legally and financially complex and is therefore only allowed by law to be undertaken by licensed Insolvency Practitioners. If you act promptly to supply us with information that we ask for, we should be able to process your IVA application in 4 to 6 weeks. Some cases are highly complex so can take a little longer.

5. How will my creditors react to an IVA?

Creditors are very familiar with IVAs, and normally they have a company policy which outlines their stance on IVA proposals. Whilst the IVA is in the process of being drafted, you will be instructed in the correct protocols to follow, so as to give your IVA the best chance of success.

6. What or who is a licenced Insolvency Practitioner?

A licenced Insolvency Practitioner is the only type of financial advisor that is seen as an expert in insolvency procedures under law. Insolvency Practitioners have passed professional exams and are assessed by a regulatory body to act in relation to insolvency appointments. These experts are then qualified to apply Insolvency Legislation and act as Administrators and Liquidators of companies. For more information see IVA regulation.

7. Will my IVA stop creditors chasing me?

Firstly, if your creditors threatening legal action you before your IVA is accepted, we can apply to a county court for an Interim Order. Once in place, your creditors cannot continue with or commence new debt recovery proceedings against you. The Order remains until your IVA proposal is proposed to your creditors.

Secondly, once your IVA has been accepted, providing that you maintain your monthly payments your creditors are not allowed to take any action against you. They are legally obliged to contact us, acting as your legal representative. They are not allowed to contact you. Sometimes it takes a while for all the different departments in your creditor's company to know you are in an IVA as the communication within these big companies is often poor. Nevertheless, within a few months you should not hear from your creditors again.

8. What will happen to my assets (things I own) in an IVA?

You must tell us about all your debts and assets of significant worth when preparing your IVA.

Personal belongings such as vehicles, computers, jewellery, etc are unlikely to be taken from you in an IVA. However, if you have an high value asset, which is not essential for basic domestic living nor work purposes, but can be easily sold, for example a valuable antique or luxury car, you may be required to include the money raised from the potential sale as part of the offer that you make to your creditors.

An IVA must be no worse for creditors than bankruptcy. If you were made bankrupt, such an items would be seized by the Official Receiver and sold to pay your creditors.

9. Can I keep my car with 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.

As a general rule of thumb; your creditors will not be interested in a car worth less than £8,000.

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 balance is no longer secured and can be included in an IVA proposal.

10. Can I still keep my business?

Yes. This is a complex matter so we will not discuss it in detail here -you'd to speak to us  for advice.

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