Your Questions Answered: IVA - Individual Invonluntary Arrangement

Your questions answered

Here you will find the most frequently asked IVA questions. If you can’t find the answer to your query here, please don’t hesitate to call us on 0800 096 1331.

Information videos
How can I get an IVA?
What are the repayment periods for an IVA?
What are the alternatives to an IVA?
Who are Insolvency Practitioners?
What are the costs of an IVA?

Credit and creditors
Will an IVA affect my credit rating?
Will an IVA prevent my creditors taking further recovery action?

General
Does an IVA cover all of my debts?
Is this a loan?
What is the difference between a secured and unsecured debt?
Will I be credit checked before acceptance?

Personal circumstances
Can an individual creditor refuse to accept an IVA?
Do creditors have to accept an IVA?
Do I have to be in full time employment?
Do I have to tell my partner?
Does it make a difference if I am a homeowner or tenant?
If I am a homeowner, will I have to release equity from my home into the IVA?

Time and costs
Can a creditor take further recovery action before the IVA is approved?
Can I cancel the IVA once it is set up?
How are the Insolvency Practitioner’s fees collected?
How long does it take to set up an IVA?
How long will the IVA last?
How much does an IVA cost?
What happens if I just stop paying into the IVA?
What happens if the IVA is not approved?
What if my circumstances change?
Will interest and other charges be frozen while the IVA is being set up?
Do I need to change banks?

Answers:

How do I contact Baines & Ernst?
It’s easy to talk to our Debt Solutions advice team, simply call on 0800 096 1331. Alternatively, complete the enquiry form to the right of the page and we’ll get back to you.
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Will an IVA affect my credit rating?
An IVA will result in you not making contractual payments on your unsecured debts; therefore your credit rating will be affected for 6 years after completion. However it is worth noting that if you have a history of missed or late payments, your credit rating could already be affected.
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Will an IVA prevent my creditors taking further recovery action?
Yes. Once the IVA is in place, you are protected from all further recovery action by your unsecured creditors –providing you adhere to the terms of the arrangement.
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Does an IVA cover all of my debts?
No. An IVA can only cover your unsecured debts and arrears that have been included in the IVA.
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Is this a loan?
No. An Individual Voluntary Arrangement is a legal process whereby you can agree with your creditors to repay them what you can afford. This may result in paying back less than you actually owe.
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What is the difference between a secured and unsecured debt?
A secured debt is a debt secured against an asset or property that you own. Typical secured debts will be a mortgage, secured loans, car loans, etc. An unsecured debt is any loan not secured against an asset or property, such as a bank overdraft, a personal loan, a credit card, store card, etc.
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Will I be credit checked before acceptance?
No. Since you will not be borrowing any money, there will be no need for a credit search.
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Can an individual creditor refuse to accept an IVA?
Yes, however if creditors holding 75% worth of the debts vote in favour of the IVA, then all creditors are bound by law to accept the arrangement.
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Do creditors have to accept an IVA?
The decision to accept or reject an IVA is made at a meeting held by your Insolvency Practitioner with your creditors. You need to get 75% acceptance by debt value – that’s 75% of the total value you owe – for the IVA to go ahead. If 75% your creditors do not agree to the proposed IVA, then it will fail.
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Do I have to be in full time employment?
No. To enter into an IVA, you only need to have a surplus income above what you need to live on. You will be asked for proof of income during the initial stages of the application.
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Do I have to tell my partner?
It is advisable that you tell your partner if you are entering into an IVA. If you live with your partner, their income may be factored into the expenditure details.
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Does it make a difference if I am a homeowner or tenant?
No. It makes no difference whether you are a tenant or homeowner or even if you are still living with your parents.
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If I am a homeowner, will I have to release equity from my home into the IVA?
You may have to release a proportion of any available equity in any property you own as part of your overall contribution to your creditors. This will usually happen after the 4th year of the IVA and is dependent on your personal situation.
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Can a creditor take further recovery action before the IVA is approved?
Yes, but you can apply to the courts for an Interim Order to stop any of your creditors taking further recovery action until the outcome with your creditors is known.
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Can I cancel the IVA once it is set up?
No. An IVA is a legal process and, therefore you cannot just cancel it if you change your mind.
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How are the Insolvency Practitioner’s fees collected?
The Insolvency Practitioner’s fees are collected from the payments you make into the IVA and you will be notified of the fees that apply in advance by your Insolvency Practitioner.
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How long does it take to set up an IVA?
This can vary but providing everything is standard and subject to creditor agreement, it takes typically between 6 and 8 weeks to set up an IVA.
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How long will the IVA last?
This can vary, but it usually lasts for 5 years.
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How much does an IVA cost?
All the costs associated with your IVA are included in the payments you make in to it. You will be informed separately in writing from the Insolvency Practitioner of the proposed fees before you commit to an IVA. Please see our Fees Page for more information on what we charge and why.

To proceed with the Baines & Ernst IVA Advisory Service you will need to pay the IVA Advisory Service fee, which will be retained by us. This fee covers the financial review and advice, the initial administration, the home representative visit along with file collection and delivery to a licensed Insolvency Practitioner. This fee is the equivalent to two months disposable income and is calculated from the information provided at application.

This Fee is in addition to any payments you may be required to make towards your IVA. All the costs associated with your IVA are included in the payments you make in to it which will be notified to you in writing by the Insolvency Practitioner, and will be detailed in your Proposal for the Individual Voluntary Arrangement.

What happens if I just stop paying into the IVA?
If you fail to keep to the arrangement and if the IVA falls so much into arrears that nothing can be done to bring it back on track then the IVA Supervisor will have no choice but to issue a Notice of Termination. This will formally bring an end to the IVA.

If the IVA fails then the creditors will be able to chase you for the remaining debt, as you will no longer have the protection afforded to you by the IVA. There is also the risk that creditors or the Insolvency Practitioner could petition for your Bankruptcy.
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What happens if the IVA is not approved?
You will have to come to an alternative arrangement with your creditors to repay your debts. We may be able to offer you an alternative solution.
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What if my circumstances change?
If you are unable to maintain repayments because of a change in circumstances, your supervisor in the IVA may be able to request a variation to reflect your new circumstances.
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Will interest and other charges be frozen while the IVA is being set up?
No, but any such interest and charges will be covered by the IVA when it is approved. As soon as we have advised you that your IVA is in place you should then cancel all standing orders / Direct Debts to your debts included in the IVA, taking care to ensure that any payments to priority creditors such as mortgage, council tax, water rates, gas, electricity etc, are maintained or re-arranged.
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Do I need to change banks?
It is a strong possibility that if you are with a bank where you have credit facilities like an overdraft or loan, they may take steps to collect the money owed to them as soon as your salary or any other payment is paid into your account.

You should think about opening another account with no overdraft facility and with a bank you do not owe money to. This will give you more control over your money and will help to make sure that all your creditors get fair payments at a level that you can afford. Our advisors will give you any advice you may need on how to change bank accounts.

If you are worried that your credit rating may stop you from opening a new account, take a look at the Evolution Current Account from Secure Trust Bank.

The Evolution Current Account offers:
Guaranteed acceptance
No credit checks
No more overdraft charges
A simple application process
Safe and secure internet banking
Help managing your money
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IVA FAQs