IVA Questions - What, Why and How?
If you are in debt it can be difficult not to panic and, to act first and think later about the solution you opt for.
An Individual Voluntary Arrangement (IVA) is often the most appropriate choice for people with debts they cannot repay. A successful IVA will cap your payments to an amount you can afford to repay over a period of years (usually five), freeze interest, stop creditor harassment and, when you complete the arrangement, remove any unpaid debt (typically we cut people's debts in half). IVAs are a binding agreement between you and the people you owe money to, so it's important that you fully understand the obligations, requirements and implications an IVA will have on your life, finances and future.The questions and answers below highlight what you should know about an IVA.
Please note that, if you enter into an IVA with us it will be administered by our specialist company, ClearDebt Limited - a wholly owned subsidiary of ClearDebt Group plc.
If you have any further questions though, please let us know by emailing:
info@abacusfinance.co.uk
To help you, we've put together a list of questions and answers which highlight:
FACTS - you need to know about how an IVA works
BENEFITS - that will help ease the current pressures you may be feeling whilst trying to pay back your debt
BE AWARE - of important issues that may effect your relationship with your creditors, pending court action, your credit rating and lifestyle.The database currently contains 49 questions.
1) How much debt do i need to qualify for an IVA?
We can usually help you if you have debt of £10,000 and a minimum of two creditors (most other IVA providers insist that you must owe at least £15,000). To qualify for an IVA, there are other criteria you will need to meet. To get a better idea of this and to find out if it fits your circumstance, please see our guide here.
We can usually help you if you have debt of £10,000 and a minimum of two creditors (most other IVA providers insist that you must owe at least £15,000). To qualify for an IVA, there are other criteria you will need to meet. To get a better idea of this and to find out if it fits your circumstance, please see our guide here.
2) How long does it normally take for an IVA process to take place, from initial call to proposal accepted?
This can vary but, in most cases, we average 4 - 7 weeks. In some circumstances we have been able to do this in as little as 3 weeks, but that is exceptional. For more information on this, please see our guide which explains the timings of this process in more detail.
This can vary but, in most cases, we average 4 - 7 weeks. In some circumstances we have been able to do this in as little as 3 weeks, but that is exceptional. For more information on this, please see our guide which explains the timings of this process in more detail.
3) How much will I have to pay into the IVA?
Monthly payments depend upon your net disposable income rather than the size of debt. Net disposable income is considered to be the amount you have left after essential monthly living expenses (excluding your debts) are taken from your monthly take home pay and adding that to any benefits that you might receive. This figure will depend on your personal circumstances and will be agreed between you and your advisor. Normally the monthly payment will not be below £200
Monthly payments depend upon your net disposable income rather than the size of debt. Net disposable income is considered to be the amount you have left after essential monthly living expenses (excluding your debts) are taken from your monthly take home pay and adding that to any benefits that you might receive. This figure will depend on your personal circumstances and will be agreed between you and your advisor. Normally the monthly payment will not be below £200
4) What is the minimum number of creditors required for an IVA?
Two - but with at least three lines of credit. An overdraft with your bank and a credit card with the same bank are normally considered to be a single creditor. So as stated above, you would need another separate creditor.
Many creditors operate under several brand names. For example, the Cahoot brand is part of Santander.
Two - but with at least three lines of credit. An overdraft with your bank and a credit card with the same bank are normally considered to be a single creditor. So as stated above, you would need another separate creditor.
Many creditors operate under several brand names. For example, the Cahoot brand is part of Santander.
5) In terms of percentage of total debt, how many creditors need to attend the creditors meeting?
Only one but note that usually creditors do not attend the meeting, they vote by proxy, (meaning they register their vote without being there). Only one proxy is therefore required. A proxy is a person or agent nominated to act on behalf of an organisation. 75% by value of the creditors registering to vote will need to vote in favour for the IVA to pass. More than nine out of ten of the IVAs we propose are passed.
Only one but note that usually creditors do not attend the meeting, they vote by proxy, (meaning they register their vote without being there). Only one proxy is therefore required. A proxy is a person or agent nominated to act on behalf of an organisation. 75% by value of the creditors registering to vote will need to vote in favour for the IVA to pass. More than nine out of ten of the IVAs we propose are passed.
6) Is it really true an IVA will guarantee to write off up to 70% of my debts?
It can - this depends entirely on our assessment of your ability to repay. More typically we cut people's debts in half (if they complete the IVA). We do achieve a 70% write-off (or better) in around one in five cases. You must keep to the terms of the arrangement, and all your debts must be included in the proposal. Unlike debt management schemes, an IVA is a once and for all settlement of your debts (excluding mortgages and secured loans).
The process of the IVA application enables our team to work out with you exactly what you can afford to contribute in one monthly payment to us, after your essential expenditure has been taken into account. We then distribute this payment to your creditors.
It is essential that you include all your debts in the proposal. Any excluded creditors could challenge the validity of the arrangement if they believe that there has been unfair prejudice.
However if you have inadvertently missed a creditor off your list, that creditor will still be bound by the IVA (unless they were owed 25% or more and wanted to vote against your proposal).
Once the arrangement is successfully finished, your debts are written off permanently.
It can - this depends entirely on our assessment of your ability to repay. More typically we cut people's debts in half (if they complete the IVA). We do achieve a 70% write-off (or better) in around one in five cases. You must keep to the terms of the arrangement, and all your debts must be included in the proposal. Unlike debt management schemes, an IVA is a once and for all settlement of your debts (excluding mortgages and secured loans).
The process of the IVA application enables our team to work out with you exactly what you can afford to contribute in one monthly payment to us, after your essential expenditure has been taken into account. We then distribute this payment to your creditors.
It is essential that you include all your debts in the proposal. Any excluded creditors could challenge the validity of the arrangement if they believe that there has been unfair prejudice.
However if you have inadvertently missed a creditor off your list, that creditor will still be bound by the IVA (unless they were owed 25% or more and wanted to vote against your proposal).
Once the arrangement is successfully finished, your debts are written off permanently.
7) Will I have to pay fees?
Although fees are charged for both setting up and supervising the IVA, they are taken out of the monthly payments you have agreed to pay into the IVA. In other words, your creditors bear the cost of an IVA (as long as you make all the agreed payments).
We do not charge for our initial advice and our fees only come into effect once your IVA has been passed successfully.
If we propose an IVA which is rejected, then we bear the cost. You are not charged a penny. We have a very high acceptance rate (97%) and would not propose an IVA when we thought it would not be approved. However, if the IVA fails because you pull out after you have agreed the proposal we created for you, then you can be charged a fee.
Although fees are charged for both setting up and supervising the IVA, they are taken out of the monthly payments you have agreed to pay into the IVA. In other words, your creditors bear the cost of an IVA (as long as you make all the agreed payments).
We do not charge for our initial advice and our fees only come into effect once your IVA has been passed successfully.
If we propose an IVA which is rejected, then we bear the cost. You are not charged a penny. We have a very high acceptance rate (97%) and would not propose an IVA when we thought it would not be approved. However, if the IVA fails because you pull out after you have agreed the proposal we created for you, then you can be charged a fee.
8) Does an IVA guarantee freedom of debt in 5 years?
We can't guarantee you will be debt free in five years, but if you're not, you will be very close to it. On rare occasions it can take an extra year but five years is standard practice for most IVAs. Changes to the timings of your completion date can sometimes come into effect if you are unable to make your monthly contributions for a while due to a change in personal circumstance.
We can't guarantee you will be debt free in five years, but if you're not, you will be very close to it. On rare occasions it can take an extra year but five years is standard practice for most IVAs. Changes to the timings of your completion date can sometimes come into effect if you are unable to make your monthly contributions for a while due to a change in personal circumstance.
9) Will going into an IVA benefit my credit rating?
No. Whilst waiting for your IVA proposal to be accepted by your creditors, we do advise you continue to make contributions, even if you cannot afford the minimum monthly payment. Failure to do this can seriously affect your credit rating.
Once the IVA proposal is accepted, your creditors notify the credit reference agencies so that it will be noted on your credit file that you are now in an IVA. This information stays on your credit file for an average of 6 years from the commencement of your IVA.
When you successfully complete your IVA, you will be free from debt, but you will not have a clean credit record until about one year later. Your IVA Supervisor will provide you with a Certificate of Completion which you are able to show anyone you wish to which will confirm that you have successfully completed your arrangement. In addition to this, your IVA Supervisor will also send a copy of your Certificate of Completion to your creditors so they can update their systems and then notify the credit reference agencies. Many clients do however; prefer to send a copy of their certificate to the credit reference agencies themselves, to help speed up the process.
No. Whilst waiting for your IVA proposal to be accepted by your creditors, we do advise you continue to make contributions, even if you cannot afford the minimum monthly payment. Failure to do this can seriously affect your credit rating.
Once the IVA proposal is accepted, your creditors notify the credit reference agencies so that it will be noted on your credit file that you are now in an IVA. This information stays on your credit file for an average of 6 years from the commencement of your IVA.
When you successfully complete your IVA, you will be free from debt, but you will not have a clean credit record until about one year later. Your IVA Supervisor will provide you with a Certificate of Completion which you are able to show anyone you wish to which will confirm that you have successfully completed your arrangement. In addition to this, your IVA Supervisor will also send a copy of your Certificate of Completion to your creditors so they can update their systems and then notify the credit reference agencies. Many clients do however; prefer to send a copy of their certificate to the credit reference agencies themselves, to help speed up the process.
10) Once submitted to my creditors, is my IVA proposal guaranteed to be accepted?
Unfortunately not. Your creditors will determine whether or not they are happy with the proposal and the suggested amount you feel you can contribute on a monthly basis. One creditor can stop the IVA if they are owed more than 25% of your total debts. If more that 75% of your creditors by value, approve the IVA, then any dissenting creditors are bound by the arrangement.
Unfortunately not. Your creditors will determine whether or not they are happy with the proposal and the suggested amount you feel you can contribute on a monthly basis. One creditor can stop the IVA if they are owed more than 25% of your total debts. If more that 75% of your creditors by value, approve the IVA, then any dissenting creditors are bound by the arrangement.
Can We Help? Want To Know More?
If you would like us to call you back with some specific advice or more details about our debt solutions then please enter your details below.
Calls free from BT landline. Mobile & other operators may charge.
Open 24 hours on Saturdays - Call Now
Open 24 hours on Saturdays - Call Now
[About Us] [Contact Us]
Live in Scotland ?
Please see Trust DeedsIVAs are for English or Welsh Residents Only.
Call us FREE (from a landline) on 0800 043 2444 for Confidential Advice
We are here to take your call 24 hours per day
An advisor will call you back to discuss your options.
By submiting your details, you're accepting our
Privacy Policy
By submiting your details, you're accepting our
Privacy Policy
“Just a little note to say THANK YOU for all you have done to help me and my family keep our house with payments we can affored.
Hopefully no one I know will be in this situation, but if they were, I would recommed your company.”
Mr M, London
More Testimonials »
Mr M, London
More Testimonials »