If you’re thinking about entering into an IVA then you’ll probably have lots of questions and quite possibly some guidance on the things you need to consider.
In this article we take a look at some of the most frequently asked questions about IVA’s.
- How do I know whether an IVA is the best option for me?
The best way to determine this is to seek professional advice from an insolvency practitioner (who is usually an accountant or lawyer). To help them advise you it’s a good idea to put pen to paper and list all the debts you have, together with as much information you have about them – for example, lender name and address, date of last payment, amount owed and so on. The more information you can provide, the better.
- Is there a certain criteria I need to satisfy to enter into an IVA?
Yes. In essence you need to satisfy the following requirements in order to enter into an IVA:
- You must have at least two separate debts (although these can also be with the same provider – for example, a bank or building society). It is possible to get your council debt written off or credit card bills for example.
- Your debts should add up to more than £10,000.00
- You must have enough spare money to make monthly repayments (an IVA is legally binding and failure to pay could have serious consequences).
- What are the key benefits of an IVA?
The type of benefits associated with an IVA will depend on your personal circumstances but can include:
- Not being contacted by your creditors once it’s entered into (either by phone, post or home visits). This is particularly useful when looking to write off council tax debt as the council tend to sub-contract bailiffs who are particularly heavy handed.
- Your creditors are unable to pursue any remaining balance at the end of the IVA. If your repayments haven’t completely covered the outstanding amount then the remainder will simply be written off.
- An IVA is time limited, which means the arrangement will only last for a period of either 5 or 6 years. Beyond that, you’re free to start afresh and rebuild your credit history.
- If you own a property you won’t be expected to sell it. You may, however, be asked to re-mortgage it during the final year of your IVA in order to release any equity.
- You don’t have to declare your IVA to anyone (such as an employer), although it will appear on the Insolvency Register.
- And what about potential disadvantages?
Perhaps the biggest cost of an IVA is the cost of entering into it. You can expect to pay around £4500 to your insolvency practitioner, although your monthly repayment will usually be used to repay it back over a period of time. If you’re asked to pay the practitioner’s fees up front then you must be confident that your proposal will be accepted, otherwise you could quickly find yourself out of pocket.
- Who can I ask for advice about an IVA?
There are numerous IVA companies across the UK who are able to provide advice – or you can speak with your local accountant or debt charity.