Questions relating to IVAs and insolvency

Q) How long will an IVA (Individual Voluntary Arrangement) last?

A) An IVA normally lasts up to 5 years / 60 months.

 

Q) Can I afford an IVA?

A) An IVA agreement will be dependent upon disposable income. This means your income and expenditure are taken into account, off-setting one against the other will give a disposable income. Part or all of the disposable income, subject to acceptance, will be used to pay your creditors. Also, if you have any assets e.g. a car, this will also be considered as a potential means of payment.

 

Q) If I become bankrupt or enter an IVA will I lose my home?

A) Normally in an IVA your home will be fully protected unless you default resulting in bankruptcy.

 

Q) Is there any IVA legislation?

A) IVA legislation relating to Insolvency can be found in the 1986 & 2000 Insolvency Act’s.

 

Q) Will an IVA affect my credit rating?

A) Once an IVA has been approved you will be unable to borrow and it will have an affect for a period of time on your credit rating.

 

Q) Can I have a bank account if I enter an IVA?

A) Whilst in an IVA you can run a bank account in the normal manner.

 

Q) If I was in an IVA and had a wind fall (e.g. Lottery Win) will I have to make a payment to creditors.

A) Any wind fall during an IVA or gift should be brought to the attention of your Insolvency Practitioner (I.P.) who is overseeing your affairs.

 

Q) If I was in an IVA or bankruptcy and should I have a change of circumstances, what should I do?

A) If in bankruptcy or an IVA, any change of circumstances should be brought to the attention of your Insolvency Practitioner who will guide you.

 

Q) If in an IVA do I have to keep updating my affairs?

A) The Insolvency Practitioner overseeing your IVA will require you, once a year, to submit any change in circumstances that may have occurred over the previous 12 months.

 

Q) If I was in an IVA what would happen if I cannot maintain the monthly payments?

A) A formal IVA agreement would be binding and therefore if you find yourself in a position whereby a change of circumstances leads you to not being able to fulfil your agreement payments, then you should seek advice at that time from the Insolvency Practitioner.. It is possible that your Insolvency Practitioner could apply for a variation to your IVA agreement.

 

Q) Is an IVA bankruptcy?

A) The short answer is no. However they are similar in their means to pay back your creditors. An IVA is a better alternative to bankruptcy, without the stigma and restrictions of a bankruptcy, normally giving more control over the situation and other benefits.

 

Q) What costs would I encounter if I entered an IVA?

A) Costs within an IVA are built into the premiums paid by the applicant, many companies state that there are no costs and this is not the case. There are ongoing discussions within the insolvency industry to reduce the overall costs which will allow creditors to be more sympathetic, resulting in more approvals.

 

Q) Will an IVA affect my property?

A) Your property will only be affected if it is within your IVA proposal. An IVA proposal being accepted could in certain circumstances affect the equity within your property at a later date.

 

Q) What is the difference between an IVA and Debt Management?

A) An IVA is an Individual Voluntary Arrangement based on an agreement normally between 3 and 5 years and supervised by an Insolvency Practitioner..

A Debt Management is an unregulated agreement that could take much longer to conclude and it is unlikely you will receive a similar discount to an IVA agreement.

 

Q) What is the estimated timescale of an IVA?

A) Timescale of an IVA will depend on the applicant providing all the necessary documentation to allow a proposal to be placed before the creditors.

The IVA proposal can be in various formats, however the normal is between 3-5 years (36-60 months) unless a third party payment is injected as a capital sum. If this was to happen and accepted by the creditors, then the IVA timescale would be much reduced and could be as little as 3 months.

 

Q) Is an IVA is subject to creditors approval?

A) An IVA proposal is subject to approval by the creditors and requires a 75% acceptance, should an acceptance not take place then a variation of the IVA proposal could be modified and presented for consideration.

 

Q) Will an IVA affect my personal banking?

A) An IVA will almost certainly affect your personal banking in that you will be restricted to further borrowings set by your I.P. You will be unable to utilise bank accounts that form part of your IVA proposal.

 

Q) Is there an IVA register?

A) Yes

 

Q) What happens if I cannot complete my IVA agreement?

A) Should you find yourself with a change of circumstances to the IVA agreement, it is possible that your I.P. on your behalf could request a variation to your IVA agreement. The alternative being bankruptcy.

 

Q) Is an IVA suitable for business purposes?

A) There are provisions for a business IVA (CVA) for sole traders and businesses alike and work on similar lines to that of an Individual Voluntary Arrangement.

 

Q) Will an IVA affect my pension?

A) An IVA will only effect your pension if it forms part of the IVA proposal agreed by the creditors.

Q) Is there any legislation covering an IVA?

A) Legislation in respect of an IVA is covered by the 1986 nsolvency Act and the 2000 Insolvency Act.

 

Q) What is the purpose of an IVA?

A) The purpose of an IVA is that, it is an alternative to bankruptcy without the stigma of bankruptcy whereby one can make a proposal to existing creditors that would result in a better return for the creditors against that of a bankruptcy.

 

Q) If I enter an IVA will I lose my personal assets?

A) Personal assets within the IVA will have to be declared to the IP (Insolvency Practitioner) who will decide on what should be inclusive within the assets of any IVA proposal presented to the creditors.

 

Q) What does an IVA do?

A) An IVA is beneficial in that a one monthly contribution is paid to the I.P. who in turn will distribute it to the various creditors. At the end of the IVA any outstanding debt is normally written off making one debt free.

An IVA further removes the hassle of creditors and debt collectors calling and more importantly it lets one get their life back, it is also an alternative to bankruptcy without the stigma.

 

Q) What proportion of debt can be written off with an IVA?

A) Many companies promise what they can not put into practice. Creditors are more aware and are seeking a higher return in respect of the debt. There are no formal guidelines and normally it will be on a case by case on any IVA proposal..

It is worth noting that it will be the creditors who decide any IVA proposal and what debt they are prepared to discount. As a guideline it will be very much based upon disposable income.

 

Q) After the completion of an IVA, am I debt free?

A) If you fulfil your IVA agreement then any debt is discounted (See 1986 Insolvency Act).

 

Q) How is an IVA prepared?

A) An IVA is based upon the information received from the debtor, at times this is cross referenced with various agencies, property valuations and income and expenditure, there also maybe other issues that need to be taken into consideration such as insurance policies or hirer purchase.

The I.P. has to have an overall view before he can make recommendations or prepare an IVA proposal for consideration by creditors.

 

Q) What information is used within an IVA proposal?

A) All relevant personal information covering income and expenditure, debts, mortgage, insurance, pensions and any other relevant information required by the I.P. to formulate an IVA proposal.

 

Q) How long does an IVA take to be implemented?

A) The preparation of an IVA will be dependant upon the debtor providing the necessary information required by the I.P. and will vary depending upon the content within the IVA proposal.

 

Q) What is an IVA Interim Order?

A) An Interim Order can be requested by an Insolvency Practitioner on behalf of the debtor through the local courts, whereby there will be a restriction on any court action until the creditors have had the opportunity to consider a proposal of payment via an IVA for the debtor.

 

Q) Will an IVA affect my employment?

A) Normally an IVA will allow the debtor to continue in their employment without interruption.

 

Q) What happens if my IVA fails?

A) The creditors can reject any IVA proposal however in most cases a new application can be presented with IVA variations included. The alternative being that should the creditors over all reject then bankruptcy could then follow.

 

Q) What happens if I default with my IVA agreement?

A) Should a default take place within an IVA agreement the I.P. or Insolvency Practitioner can fail the IVA agreement which could result in a bankruptcy application.

 

 

Q) What is an IVA variation?

A) An IVA proposal could be presented whereby a single or more creditor(s) require other factors in being built into the IVA agreement.

A second point could be that the financial circumstances have changed and as a result the I.P. goes back to the creditors seeking a variation of the IVA agreement.

 

Q) Will an IVA restrict further borrowing?

A) The clear answer is yes, however the best advice would be to seek clarity from the acting I.P.

 

Q) Will an IVA affect my credit cards?

A) Yes. Restriction on credit is automatic however one should seek clarity from the acting I.P.

 

Q) Is an IVA a binding agreement?

A) An IVA or Individual Voluntary Arrangement, is a binding agreement between creditor and debtor.

 

Q) Should I get legal advice before signing any IVA agreement?

A) Almost certainly we would advise that any debtor seeks advice from their solicitor on any proposal to be presented to creditors, as any agreement IVA will be formally binding.

 

Bankruptcy Questions

Q) Is bankruptcy the right choice?

A) Before entering into bankruptcy, one should explore all avenues as such a decision may have a long lasting effect on ones life and credit history. Bankruptcy should be the last resort if one finds that their financial situation is not sustainable to make a binding agreement with creditors.

A guideline would be income and expenditure and disposable assets, along with pressure from creditors. Some people can not take the pressure or hassle one would encounter from the creditors or their representatives and feel that bankruptcy is the easier option.

There are plenty government bodies providing advice and this root should be taken before any action.

 

Q) What are the alternatives?

A) Alternatives come in different formats; an IVA for instance is an Individual Voluntary Arrangement whereby an agreement maybe reached between the debtor and the creditor(s).

If you are a home owner you maybe able to, increase your current mortgage and consolidate any additional debts.

It is possible that the debtor can downscale their property resulting in release of equity to service or clear any other outstanding debts.

Other alternatives maybe available and will only result with additional information.

 

Q) If I were made bankrupt, what would be the process?

A) If one was made bankrupt the insolvency service overseeing my affairs may require you to undergo a public examination of your finances.

 

Q) Will have I have to attend a court?

A) Most people attend court however it is not compulsory.

 

Q) How long a bankruptcy last?

A) A bankruptcy will normally run for a period of 12 months however in some cases this can be shorter, there is also provisions for to extend bankruptcy periods.

 

Q) Will a bankruptcy effect my employment?

A) Bankruptcy will almost certainly effect your employment if say you were a police officer, security guard or an MP these are only examples and there are many other areas that could be effected.

 

Q) What will happen to my property if I go into bankruptcy?

A) It is more than likely if one is made bankrupt that the property would be sold with any surplus being credited to the estate.

 

Q) What are the costs involved in a bankruptcy?

A) If one makes themselves bankrupt which can be done through the local court there will be costs attached to any application they normally vary between £450-600.

If one is made bankrupt then the costs come out of the estate.

 

Q) Will a bankruptcy affect my personal banking?

A) Bankruptcy will almost certainly effect your personal banking as you will be curtailed to further borrowing and in most cases banking facilities.

 

Q) Is there a bankruptcy register?

A) Once made bankrupt a notice will be placed within the national paper in your locality as well as the London Gazette, it is then registered on the bankruptcy register.

 

Q) Will a bankruptcy affect my pension?

A) Should one be made bankrupt then any private pension will normally be classed as an asset within the bankruptcy itself.

 

Q) Is there any legislation covering a bankruptcy?

A) The 1986 and 2000 Insolvency Act cover legislation for insolvency and bankruptcy.

 

Q) If I enter a bankruptcy will I lose my personal assets?

A) All personal assets within a bankruptcy will be assessed by the acting Insolvency Practitioner.

 

Q) What does a bankruptcy do?

A) Bankruptcy is a restriction on ones life for a period of time and there after it can and will effect the credit aspect and can leave a stigma on credibility.

 

Q) What will happen to my debt if i enter a bankruptcy?

A) Should one enter into bankruptcy any debts will be addressed by the acting Insolvency Practitioner and will be discarded once the bankruptcy has been dissolved.

 

Q) How long does a bankruptcy take to be implemented?

A) If one makes themselves bankrupt this can be done through the local court very quickly and the timescale will be variable. Should one be made bankrupt this can take up to 6 weeks from the time of receiving the bankruptcy petition.

 

Q) Will a bankruptcy affect my credit cards?

A) Once in bankruptcy all credit cards will be cancelled and you will be under the supervision of the acting Insolvency Practitioner.

Q) Should I receiving a bankruptcy petition, what should I do?

A) If in receipt of a petition for bankruptcy you should seek immediately advice form your local citizens advice office or independent solicitor.

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