Individual Voluntary Arrangement

FAQ

I am a home owner. Will I lose my house if I propose an IVA?

If you own your home, an IVA will offer protection from your creditors, compared to Bankruptcy. In Bankruptcy, if you have equity it is likely that your home will be sold to clear your debts.

In return for keeping your property, your creditors are likely to insist that you attempt to remortgage during the IVA, usually in the final year. If you have minimal equity, creditors are likely to accept that you do not have to remortgage at all.

During the IVA, you will still be expected to maintain any payments to your mortgage provider. If you have secured loans or other charges on your home, you will be expected to maintain payments to these too. Failure to do so could risk losing your home. If you are worried about the consequences for your home during the IVA you should contact Ideal Debt Solutions for more details.

I am Self-Employed – can I propose an IVA?

Proposing an IVA depends on individual circumstances. However, an IVA is open to Self-Employed individuals.

It is likely that more information will be required than for an employed person. You will be asked for a Cash-Flow forecast and copies of previous trading accounts to support your income details.

If you are Self-Employed and are considering an IVA, contact Ideal Debt Solutions to discuss your options.

I am a Director – can I put forward an IVA?

Being a Director is not an automatic bar to proposing an IVA. However, you should check your Articles of Association to ensure that your company will not stop you from doing so.

Unlike in Bankruptcy, you will be able to continue acting as a Director. If you are concerned about proposing an IVA and you are a Director, you should contact Ideal Debt Solutions to discuss your concerns.

I owe money to HM Revenue & Customs, alongside all my other debts. What will happen to this during my IVA?

If you owe money to HM Revenue & Customs, your debt must be included in any IVA proposal. During the IVA, each liability is treated differently. Before your proposals are put forward, we will guide you through dealing with your responsibilities to HMRC, before and during the Arrangement.

After your IVA is approved, you are likely to receive correspondence from HMRC further clarifying your responsibilities during the IVA. You will still be expected to submit returns on time to HMRC before and during the Arrangement. If you require more time to do so, you must contact HM Revenue & Customs right away, so that you do not incur any penalties for late filing.

During the Arrangement, it is likely that HMRC will insist that any late returns are treated seriously by your Supervisor. It is important to keep HMRC and Ideal Debt Solutions informed if you experience difficulty or changes to your trading, during the Arrangement.

Are Nominee & Supervisor fees payable on top of my monthly contribution?

No – your contribution is confirmed at the Meeting of Creditors by you and your creditors and there is no additional payment to cover fees. If your Arrangement involves creditors writing some of your debt off, they are effectively paying the fees.

Why do I have to change my bank account? Will I be able to have a debit card and cheque book?

If you are overdrawn, changing your bank account is necessary to maintain control of your income. This also avoids the possibility of treating your bank unfairly, against your other creditors. Your bank may freeze your account if they are one of your creditors. If this happens when your salary has been paid into your account you will not be able to fund your living costs for the month. The new account must be a basic facility without any credit facilities e.g. overdraft. Many basic bank accounts provide a payment card that may be used to make purchases in shops such as the Visa Electron or Solo cards.

I don’t want to include my catalogue / overdraft / credit card / loan because I can manage this by myself.

The IVA includes all unsecured debt and all your disposable income is paid into the IVA so you will just have 1 manageable payment for the agreed period, to take care of all your debt. All unsecured creditors therefore must be included in the Arrangement.

Will the IVA be 5 years long or will it be extended?

The usual term is 5 years, however if creditors request an extension they will do this at the time of your Meeting of Creditors. The extension will only be confirmed if you agree to it.

I sometimes receive a bonus, what happens with this?

If your income sometimes includes a bonus and additional payments that you do not receive every month, we cannot include all of this in your monthly income calculation as this would provide a figure that is not sustainable for you. It is expected that occasional payments received in your income are advised to us as soon as possible. Your creditors will usually expect you to pay half of the net amount, while the remaining half stays in your pocket.

My creditors are still chasing me and my Creditors Meeting has not yet taken place. What shall I tell them?

Your creditors will usually pursue you until they have collected payments they are due, or agreed a payment plan with you.

Dealing with all this can be stressful and exhausting. If you decide to proceed with an IVA and you are receiving demands from your creditors, we can contact them on your behalf. Your creditors will usually agree to put your account on hold until the date of the Meeting of Creditors has been arranged. However, creditors are under no obligation to do this and they may continue to chase you for their debt. It is important that you act quickly when you decide to propose an IVA. You should supply all the information that is requested from you, so that the process is not delayed. This will minimise the contact that you receive from your creditors.

Do I have to attend the Meeting of Creditors (MOC)?

You are welcome to attend your Meeting of Creditors however it is not essential. Your creditors submit votes by fax and email and do not attend the premises personally. You will need to be available at least by telephone so we can confirm the outcome of the Meeting and discuss any queries or modifications that your creditors may raise.

What happens if my IVA is rejected, can you still help me?

We work with you to ensure that your proposal is fair for your creditors to consider. We are obliged to ensure that it has a reasonable chance of being approved, before we put it forward to your creditors. In the unlikely event your Arrangement is rejected, we will discuss the reasons for the rejection with the creditor to see if they will reconsider. In the event that your proposal cannot be approved, we will offer advice and help with regards to an alternative solution.

Can my creditors take action against me once my IVA is agreed? What about if one creditor had rejected it?

Put simply, no. Even if a creditor votes to reject the IVA, once it has been approved by a majority, they are still bound by its terms. They cannot decide to pursue you outside of the IVA. Most of your creditors will understand the IVA process. If you are concerned about a creditor taking action, contact Ideal Debt Solutions to discuss this.

What happens if I have forgotten to include a Creditor before the Meeting of Creditors?

It is important to be as thorough as possible when putting your proposal to your creditors. You must take care to include all your debts, no matter how large or small.

If you honestly forget to include a creditor, you must contact Ideal Debt Solutions straight away. We will guide you through the process of including them as an additional creditor and the implications for your Arrangement. This may require a formal meeting of your creditors to agree to the change to your Arrangement. If you think you have missed a creditor from your proposal, you should contact Ideal Debt Solutions right away for advice.

When will you make payments to my creditors?

Your creditors agree to the terms of the Arrangement when it is approved. They deal with thousands of IVAs each year and they understand that they will receive irregular payments towards your debt. From time to time, your creditors will ask us to make more regular payments to them. This is usually every three months, but it can vary. Each year, you will receive a report on your Arrangement. This will tell you how much has been paid to your creditors. If you need more information about your Arrangement, contact Ideal Debt Solutions.

Will my payment stay the same during the IVA?

Your payment will be based on how much you can afford to offer your creditors at the start of the IVA. If there are any anticipated changes to you income or expenditure, your payment will change to reflect this, to ensure that your offer to creditors is the best that you can make.

You may have changes to your income or expenditure during the IVA that means that you have more money left over each month. In this case, you would be expected to pay around 50% of the difference into the IVA. The specific amount will depend on your Arrangement. This means that you keep the difference and it is in both the creditors and your interest, if you can perform overtime.

My IVA has been approved – why are my creditors still chasing me?

Your creditors will be advised when you put your proposal forward and when your Arrangement is approved. It is important that you include all your creditors so that they are fully aware that you are proposing an IVA. It is also important that you provide us with as much information as possible.

From time to time, even when all your creditors are included, they may continue to contact you for a short time after your IVA is approved. This is usually because it may take time for your creditors to process the information that we send them, or to pass it to the correct department. Once your IVA is approved, you can be assured that your creditors are bound by its terms and cannot take action against you. If you are still being contacted by your creditors, contact Ideal Debt Solutions.

Why am I still receiving creditor statements, during my IVA?

During the Arrangement, your creditors are now legally entitled to send you statements for your account. This is for information only and your creditors cannot take action against you regarding the account. If you are still being contacted by your creditors, contact Ideal Debt Solutions.

What happens if my situation changes – e.g. lose my job, receive a promotion, have a baby, move house etc?

You must always report any changes to your circumstances immediately to your Supervisor who will advise an appropriate course of action. By keeping us informed of changes as soon as possible, a wider range of options will be available to you.

I own a property. Why do I have to re-mortgage in the final year & if I can’t, will I have to sell my property?

Unless you state otherwise, your property is proposed to be excluded by way of sale from the Arrangement. Creditors expect you to use your best endeavours to try and obtain a re-mortgage, if you have equity of more than £5,000. Your proposal will state that if this is not possible, your IVA may continue .The creditors expect that you will extend the Arrangement by a further 12 months, in lieu of the equity.

What happens if I miss a payment?

Your Arrangement is a serious commitment between you and your creditors. However, in the event something unexpected happens, you should contact Ideal Debt Solutions right away. In emergencies, a payment break may be permitted for a limited time – but this must be by agreement. The important thing is that you should contact Ideal Debt Solutions immediately for advice.

What happens if I continue to use credit?

Your Arrangement will be agreed between you and your creditors so that you have a reasonable amount to meet your essential commitments and household expenditure each month. Before putting your proposal to your creditors, you must include all your outstanding debts – from small ones such as Catalogue Accounts and Store Cards, to larger debts such as Consolidation Loans and Credit Cards. Ideal Debt Solutions will advise you how they will be treated during the Arrangement. We include all your debts as you are legally required to do so. It also gives you a fresh start. Due to this, you should not require credit after your Arrangement is approved. If you keep using credit, not only will you continue carrying the burden of debt, but you risk the failure of your Arrangement as the terms have been broken.

Can I settle the Arrangement early?

Simply, yes. There are many ways to settle your Arrangement. Usually, the terms of your IVA will state that in the event you have an unexpected windfall or inheritance, you are required to pay off all your obligations under the Arrangement. The Arrangement will then end. You may have received a windfall that is insufficient to pay all your obligations in full. In this case, it is still possible to put an offer forward to your creditors. Your creditors will give such offers serious consideration. We will discuss the details with you, before putting the offer to your creditors. Usually, we will need to hold a formal meeting of creditors to discuss the offer. If you are thinking of settling your IVA early or you think that you may receive a windfall in the future, contact Ideal Debt Solutions for more information.

Can I change my payment dates?

Yes. When your Arrangement starts, we will agree a payment date that is convenient to you. During the IVA, you may wish to change this date. You can change your payment date during the Arrangement by contacting Ideal Debt Solutions. You must not cancel any Direct Debit or Standing Order instructions, without prior agreement. Canceling an instruction may result in you receiving unnecessary bank charges. Your payment may also be requested from your bank again, resulting in further charges. The important thing is to contact Ideal Debt Solutions to ensure your payment date is changed correctly.

What happens if I lose my job during the IVA?

At the outset of the Arrangement, we will try to account for any known changes to your circumstances when we draft your proposal with you. Fortunately, if anything unexpected occurs during the Arrangement, like losing your job, we are usually able to help you through what will be a difficult period. By speaking to Ideal Debt Solutions as soon as anything unexpected occurs, we can agree to assist you by reducing your payments or even agreeing a payment break for a short period. You are likely to want to obtain alternative employment as quickly as possible to ensure your household expenses are covered. It is also important that you seek to claim any benefits that you may be entitled to. If you are likely to be out of work for a long period of time or your alternative work pays you at a different rate, we can discuss the consequences. We may need to meet formally with your creditors to discuss this and agree a change to your proposal – called a ‘variation’. It is important that you let us know as soon as possible, so that we can advise you accordingly.

My creditors are still chasing me and my Creditors Meeting has not yet taken place. What shall I tell them?

Before your IVA is put forward, your creditors are entitled to pursue you for your debts. Your creditors may exercise their right to pass your debts onto a Collections Agency or Solicitors for further action. Your creditors will usually pursue you until they have collected payments they are due, or agreed a payment plan with you. Dealing with all this can be stressful and exhausting. If you decide to proceed with an IVA and you are receiving demands from your creditors, we can contact them on your behalf. Your creditors will usually agree to put your account on hold until the date of the Meeting of Creditors has been arranged. However, creditors are under no obligation to do this and they may continue to chase you for their debt. It is important that you act quickly when you decide to propose an IVA. You should supply all the information that is requested from you, so that the process is not delayed. This will minimise the contact that you receive from your creditors.

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Individual Voluntary Arrangement

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