Your IVA & Insolvency questions answered
It’s easy to talk to our Debt Solutions advice team, simply call us on the number at the top of the screen. Alternatively, complete the enquiry form to the right of the page and we’ll get back to you.
An IVA will result in you not making contractual payments on your unsecured debts; therefore your credit rating will be affected for 6 years from the start of the IVA. However it is worth noting that if you have a history of missed or late payments, your credit rating could already be affected.
Yes. Once the IVA is in place, you are protected from all further recovery action by your unsecured lenders – providing you keep to the terms of the arrangement.
No. An IVA can only cover your unsecured debts and arrears that have been included in the IVA.
No. An Individual Voluntary Arrangement is a legal process whereby you can agree with your lenders to repay them what you can afford. This may result in paying back less than you actually owe.
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.
No. Since you will not be borrowing any money, there will be no need for a credit search.
Yes, but if lenders holding 75% worth of the debts vote in favour of the IVA, then all lenders are bound by law to accept the arrangement.
The decision to accept or reject an IVA is made at a meeting held by your Insolvency Practitioner with your lenders. For the IVA to go ahead, the proposal will need to be voted on and approved by lenders representing 75% of the value of your debts. If 75% of your lenders do not agree to the proposed IVA, then it will fail.
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.
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.
No. It makes no difference whether you are a tenant or homeowner or even if you are still living with your parents.
You may have to release a proportion of any available equity in any property you own as part of your overall contribution to your lenders. This will usually happen after the 4th year of the IVA and is dependent on your personal situation.
Yes, but you can apply to the courts for an Interim Order to stop any of your lenders taking further recovery action until the outcome with your IVA application is known.
No. An IVA is a legal process; therefore you cannot just cancel it if you change your mind.
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.
This can vary but providing everything is standard and subject to lender agreement, it takes typically between 6 and 8 weeks to set up an IVA.
This can vary, but it usually lasts for 5 years.
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.
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 lenders 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 lenders or the Insolvency Practitioner could petition for your Bankruptcy.
You will have to come to an alternative arrangement with your lenders to repay your debts. We may be able to offer you an alternative solution.
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.
No, but any such interest and charges will be covered by the IVA when it is approved. As soon as you have been advised 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 bills such as mortgage, council tax, water rates, gas, electricity etc, are maintained or re-arranged.
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 lenders 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.
- A basic bank account with no hidden fees or unexpected bank charges
- A MasterCard® prepaid card which can be used at millions of locations worldwide
- Pay your bills by Direct Debit and Standing Orders
- Earn cash rewards at leading high street retailers
- Simple, secure online banking
- Guaranteed acceptance – no credit checks*
- One off set up fee of £12.50 and a monthly management fee of £12.50
*UK residents aged 18 and over. Subject to satisfactory identity and residency checks