IVA Client - Common Questions

Below are frequent questions from our IVA clients, once their IVA is in place.

To to via a IVA FAQ for people considering an IVA, click here.

I've unexpectedly come into some money. What are my obligations?

This is called a windfall, for example an inheritance or large bonus payment. Your IVA is likely to include a windfall clause requiring you to pay some of the money into the arrangement. In the event of bonus payments, or regular overtime, depending on their value, typically you will be required to share the benefit on a fifty-fifty basis with your creditors.

What if my circumstances change and I can't afford agreed payments?

Should your circumstances change during the term of your IVA it is possible for the terms to be varied. Your supervisor has discretion to agree minor changes but in the event of more substantial changes in your circumstances it is sometimes necessary to obtain the approval of your creditors once again to amend the agreed terms. This is called applying for a variation. If that is necessary a dedicated team will agree a fresh income and expenditure account with you and submit revised proposals to your creditors for the remaining period of the IVA. A meeting will be arranged to obtain creditors agreement to the amended terms.

Is redundancy money considered to be a windfall?

Unfortunately, under the terms and conditions of IVAs, redundancy pay is a windfall and would be expected to be paid into the IVA. Typically, you would be allowed your to keep several months worth of salary in order to maintain living costs and your IVA payments whilst you're seeking employment. During this time, you may be asked to provide proof you are actively seeking work. Any remaining balance of the redundancy would have to be paid into the IVA for the benefit of creditors.

Is a pension lump sum considered to be a windfall?

Yes it is, unless there a specific clause in your IVA about this. If the lump sum is higher than the amount owed, following an assessment, you will normally be expected to repay 100% of your debt plus fees and interest, therefore completing your IVA.

If the lump sum amounts to less than the amount owed and the IVA is not concluded, a full review will be conducted to see how your IVA contributions have been affected. This may result in a reduction in monthly contributions or an early conclusion  of the IVA by a full and final settlement.

If you were to delay receipt of such a lump sum until your IVA was concluded - it would not be of interest to your creditors.

My partner and I intend to get married. How will this impact my IVA?

You marital status alone has no effect on your IVA nor your liability towards your partners debts, nor their liability towards yours. If you're already co-habiting and are simply making it official - then you don't even need to tell us.

However, if your marriage changes your domestic arrangements and your ability to make IVA payments changes as a result - you must inform us. This applies to both affording more towards repaying your debts, or less.

Can I change IVA company (or IP) during my IVA?

We get asked this from time to time from clients of other IVA providers. The simple answer is, probably not.

When your IVA application was being processed, your insolvency practitioner represented you in negotiating terms with your creditors. When you IVA was approved, they were voted in as supervisor by your creditors and, from that point on, they represent them monitoring you and your performance, while still continuing to offer the support you need, when you need it. The best course of action is to complain to you IVA provider through their official channel and if dissatisfied, escalate your complaint to the body who licensees' your IVA supervisor.

I'm in an IVA and want to sell my home. Can I?

Your IVA proposal is likely to include a provision whereby your Supervisor must be informed of plans to sell the property. Once any mortgage or secured loans have been cleared from the proceeds, normally 85% of what is left  (your equity) must be made available to pay into the IVA, up to the value of your ordinal debt before entering the IVA.

In most cases, martial homes are considered to be owned 50/50 by each spouse regardless of whom has been making mortgage repayments. Therefore your share of the equity is 50% of the total. A key benefit of an IVA is that it prevents the potential forced sale or repossession of your home. So, please speak to us for advice if you're considering selling it or are being forced to sell it.

Can I buy a vehicle on finance whilst in an IVA ?

You can check the terms if your IVA to see whether you're allowed to take any additional credit. If so, permission from your Supervisor would be required with approval depending on the necessity of your circumstances and how reasonable the request. Generally speaking, it is unusual to obtain a vehicle on finance after entering an IVA.

If this is possible, being in an IVA would appear on the credit check that would almost certainly be preformed. Depending on the whom you request finance from, they may or may not accept you, so the ultimate decision rests with them. If you are not eligible for credit this way, then someone acting as a guarantor for you can be a solution, but you must still get permission from your Supervisor before taking this option.

Can I finish my IVA early?

Yes. Creditors may accept a lump sum to bring the arrangement to an early conclusion if you can show that you are paying as much as you can afford. What you are not allowed to do is borrow money to pay into the IVA.

Can I add additional debts to my IVA after approval?

We advise you speak to us about this. But generally, If the debt pre-dates to your IVA being accepted, this should fall under the terms of your IVA. If it is a debt that has accumulated after your IVA was approved, then you are liable to repay this outside your IVA, in full.

Can I cancel my IVA?

Yes, but any payments already made will be distributed to creditors who may then commence alternative recovery action, including bankruptcy. An IVA is a legal process. Once it is set up it cannot be cancelled simply because you have changed your mind. However, if your circumstances change and you can no longer afford the repayments, then your IVA can be terminated. You may seek to enter a Debt Management Plan, or your creditors can take whatever alternative action they consider appropriate.

What happens at the end of my IVA?

We have dedicated staff who will deal with the closure of your IVA at the end of its term, issuing a final report to your creditors and sending a Certificate of Completion to you that you can produce to credit reference agencies to prove that you have successfully completed your IVA.