IVA Frequently asked questions

Your IVA is likely to be in place for 5 years which is quite a long period of time. For most people who enter into IVAs due to being unable to repay credit card debts, personal loans and debts of a similar nature your IVA will be prepared following the guidelines of the IVA Protocol.

The protocol is a voluntary agreement, which provides a standard framework for dealing with consumer IVAs and applies to insolvency practitioners and creditors. Most major creditors have agreed to follow the terms of the protocol. The terms of the protocol include guidance on how creditors are expected to deal with payment problems in an IVA. Your IVA proposal will provide you with the opportunity to take payment breaks if your circumstances change and you need to miss one or more payments into your IVA. If your circumstances change on a permanent basis your IVA supervisor may need to seek a decision from your creditors authorising a long term reduction in the payments you had previously agreed to make. Provided that you have been honest and co-operated with your IVA supervisor you can expect your creditors to agree to help you and accept that your IVA payments must reduce.

Yes  – there is no reason why should not change your car during your IVA. Your creditors understand that for many people it is important for them to have the use of a reliable car so that they can commute to work and continue to earn the income from which the IVA contributions are going to be paid. The only limitation on changing your car is the amount of new finance you are allowed to obtain for the purposes of acquiring a new car. Before you obtain additional credit you are expected to obtain the consent of your IVA Supervisor. Your IVA Supervisor will wish to make sure the additional credit you are taking on is affordable for you and also that it is not unreasonably expensive.

No – You are free to change jobs at any time during your IVA. If your income increases when you change your job you may need to inform your IVA Supervisor as this may affect the amount of your income contributions payable into your IVA when your IVA payments are reviewed at the next anniversary of your IVA. Your creditors will expect you to agree to increase your contributions by up to 50% of the increase in your net income but they will also allow you to deduct from this increased payment any additional living expenses or expenses associated with your new employment such as additional travel costs.

As a mortgage is a form of credit you will be expected to obtain the consent of your IVA Supervisor to a new mortgage. More importantly, you are likely to find that there are only a few mortgage lenders who are willing to agree to provide you with a mortgage before your IVA is concluded. If you find a mortgage lender who is happy to provide you with a mortgage then your IVA Supervisor is likely to agree to the mortgage proceeding provided that your income and expenditure budget still allows you sufficient money to be able to continue paying your agreed IVA contributions.

The IVA Protocol ]is a voluntary agreement, which provides a standard framework for dealing with consumer IVAs and applies to insolvency practitioners and creditors. Most major creditors have agreed to follow the terms of the protocol. The terms of the protocol include guidance on how creditors are expected to deal with payment problems in an IVA. Your IVA proposal will allow you to take payment breaks if your circumstances change and you need to miss one or more payments into your IVA. Payment breaks are available if your circumstances change unexpectedly. If you take a payment break, the missed payments will be added to the end of your IVA payments which will mean that your IVA will last longer than 60 months. If your circumstances change permanently and you are only able to afford to pay reduced income contributions your creditors will be invited to agree to vary the terms of your IVA to allow you to pay reduced contributions. In most cases, you will find that your creditors will agree to a variation of your IVA when the changes to your circumstances are explained to them.

As your IVA is a legally binding agreement between you and your creditors it is not possible to simply cancel your IVA. It is very important that you carefully consider your options before proceeding with your IVA. You need to ensure you understand the terms of your IVA before you proceed and if you have any questions or reservations, these need to be answered before your IVA proposal is signed and sent to your creditors.

If you fail to maintain the agreed payments into your IVA then your IVA Supervisor will have to take steps to terminate the IVA unless arrangements are made for the missed payments to be paid. A notice of breach of your IVA will be sent to you and if you do not respond to the notice the next step to be taken is for your IVA Supervisor to terminate your IVA. This is likely to mean that very little will have been paid to your creditors and once your IVA has ended your creditors will be able to take action against you again to try and enforce payments of their debts. If your circumstances have changed unexpectedly such as e.g. you are unable to continue working due to ill health and you cannot maintain payments of your agreed IVA contributions your creditors may agree to your IVA being concluded on the basis that you have substantially complied with your obligations.

Your IVA proposal will include provisions allowing for your IVA Supervisor to ask your creditors to consider decisions to vary the terms of your IVA. Your creditors recognise that unexpected events or changes in personal circumstances may occur which mean that unless your IVA is varied your IVA would fail.

If an unexpected event such as e.g. long term ill health occurs it is important that you inform your IVA Supervisor as soon as possible and discuss with your Supervisor how your IVA may continue on revised terms e.g. paying reduced income contributions. Your supervisor will help you and explain what needs to be done to obtain the agreement of your creditors to vary the terms of your IVA.

The Supervisor will invite your creditors to consider decisions to vary your IVA. 75% in value of your creditors who vote regarding the decisions must vote to agree to the proposed variation. In practice, the vast majority of proposed variations are approved.

Your IVA is likely to include a requirement for your IVA Supervisor to undertake a yearly review of your income and expenditure. Your IVA Supervisor has to send a report each year to your creditors updating them on the progress of your IVA. The purpose of your annual IVA review is to check for any changes in your income and your expenses so that this information can be included with your Supervisor’s report. If your income has increased and your expenses have not increased by a similar amount you may be requested to increase your IVA contributions. Please note however that any increase must be affordable for you and before any increase is agreed your Supervisor must ensure that you keep enough of your income to pay your reasonable living expenses. If your income has reduced or your expenses have increased which means that you may be struggling to afford to pay your IVA contributions we will work with you to help you continue your IVA with affordable monthly payments. If necessary we will explain changes in your circumstances to your creditors and invite them to agree to vary the terms of your IVA to ensure it reaches a successful conclusion. If you have any concerns about your income or your expenses and how these may affect your IVA contributions it is important that you contact your IVA Supervisory team who will be happy to help you and answer any questions you may have.

If you find there has been a change in your circumstances this may mean it is in everyone’s interests to look at varying the terms of your IVA so that your IVA finishes earlier than was originally expected. If a friend or relative who is aware of your financial difficulties has offered to provide you with financial assistance to clear your debts you may find that you are in a position to offer a single lump sum payment to be paid into your IVA in place of continuing to pay income contributions for the remainder of the 60 months originally agreed.  This offer may be attractive to your creditors because they will receive payment earlier than if they had to wait for the full 60 months term of your IVA to receive all their dividends even if this means that your creditors don’t receive quite as much as they originally expected to receive.

Your IVA Supervisor will be happy to discuss with you any proposals you may wish to make to vary your IVA so that it concludes early. Your Supervisor will be able to advise you whether an offer to vary your IVA is likely to be accepted by your creditors. Provided that your offer is fair and reasonable your Supervisor will work with you to put forward your proposal for acceptance by your creditors.

When your IVA finishes you will receive a report from your IVA Supervisor confirming your IVA has been successfully concluded. Your IVA Supervisor will update the Insolvency Register which has a record of your IVA so that the Insolvency Register will show that your IVA has been successfully concluded. Your credit record will also be updated to show that your IVA has been concluded. After a further 12 months you can expect the record of your IVA will no longer be shown on your credit report. Your creditors will also receive the final report from your IVA Supervisor. The report will explain how much has been repaid to your creditors after the costs of your IVA have been paid. Your creditors