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personal-debt-faqs

Frequently Asked Questions – IVA

Can I? What if?
q

How do I apply for an IVA?

A

When you reach a level of debt that you feel is unmanageable, you should take advice from a debt charity advisory service or contact us here at Personal Debt Solutions. You will be able to discuss your situation with us and if an IVA is suitable for you, we will start to put a proposal together to put to creditors based on the information provided to us. Once the proposal has been accepted by 75% of your creditors by value, you will be entered into your IVA which will
usually last for five years.

q

How do I know that I am eligible for an IVA?

A

You will usually be eligible for an IVA if you are struggling to pay substantial levels of debt to a number of unsecured creditors. You will also need to have an income which would allow you to make monthly repayments for your debt. The best way
to find out if you are eligible is to get in touch with us.

q

What debts are included in an IVA?

A

All unsecured debts, such as credit cards and loans, can be included in an IVA. If you are unsure,
get in touch with us.

q

What debts cannot be included in an IVA?

A

Secured debts from your bank, such as a mortgage, or a secured lender will not be included. Other debts that cannot be included in an IVA include student loans, fines and child maintenance arrears. For any queries on this, contact us.

q

How long does an IVA affect your credit rating?

A

An IVA stays on your credit rating for six years from the date of entering the procedure.
However, be aware that this may still affect your credit rating after it has been removed especially if you do not try to build your credit rating back up to a good level.

q

Who do I need to tell that I am in an IVA?

A

Your unsecured creditors will be notified when your IVA application is made. You may also need to inform your employer if you work in certain professions such as the police.

q

Are there any sectors I may not be able to work in with an IVA?

A

Usually you will not have to inform your employer but there may be some sectors where you may have to inform your employer of an IVA. You should check your employment contract to see whether it is necessary to inform your employer or not.

q

Do I need to go to court?

A

No, there is no need to attend court when applying for or during the IVA process.

q

Will creditor pressure keep happening?

A

An IVA will put a stop to creditor pressure from unsecured creditors included in your IVA. Those creditors who cannot be included will still be able to threaten you with legal action if you do not pay them. If you find yourself in this situation,
get in touch with the insolvency practitioner (IP) handling your IVA to discuss your options.

Can I?

q

Arrange a loan or credit?

A

In an IVA you will have committed to pay into the scheme an amount that you can afford to meet existing debts. For this reason you are unlikely to have sufficient
surplus cash available to take on additional commitments for the duration of the IVA. For the same reason it would not be practical to apply for a mortgage as additionally a deposit would be required.

q

Can I get a credit card?

A

This is dependent on your situation, the amount of debt you already have and whether the credit card provider is willing to accept you in your current situation. If you do get approved for a credit card whilst in an IVA, it is likely that the
interest rate will be a lot higher for you. Again, it is worth keeping in mind that if this affects the amount you can afford to pay in an IVA, it may not be seen favourably by creditors.

q

Can I swap to bankruptcy?

A

You can swap to bankruptcy if you are struggling to make your monthly IVA payments and you fit the criteria of bankruptcy. You should get in touch with the IP handling your IVA to discuss
the possibility of this. Also, if you cannot afford to make the monthly repayments or you no longer meet them, you are likely to be made bankrupt anyway.

q

Can I add any new debts to an IVA?

A

You may be able to add new debts to your IVA once you are already in it but this is dependent on your creditors, type of debt, the amount you owe. A new proposal will usually need to be written when this happens. You should discuss this with the
IP handling your IVA.

q

Can my partner and I get an IVA together for joint debts?

A

No, there is no such thing as a joint IVA. You would have to get separate IVAs that would be arranged simultaneously and any unsecured joint debts you have will
need discussing with the IP when you first get in contact with them.

q

Can I go on holiday in an IVA?

A

There is nothing to stop you going on holiday when you are in an IVA particularly if this has been paid for by someone else, arranged before the IVA procedure or is a gesture of goodwill from a friend/relative to stay in their holiday property.
If you are contemplating booking your own holiday while in an IVA, it is worth getting in touch with your IP for advice.

q

Can I emigrate?

A

This would be something to be discussed with the IP handling your IVA. Questions may be asked about why you are emigrating and it is advisable not to proceed without discussing this first.

What if?

q

What if I have an ISA, stocks, shares etc.?

A

These will be taken into account when you make your IVA proposal and creditors will probably feel that you should use any savings or profits in the IVA to pay them the money that they are owed.

q

What if I get a pay rise whilst in an IVA?

A

You should inform your IP and depending on the size of the increase could result in an adjusted contribution.

q

What if I get a new job and the benefits package includes a car?

A

Inform the IP handling your IVA to discuss the best options in this situation. Do you need a car as part of your benefits package?

q

What if I receive a windfall or inheritance whilst in an IVA?

A

Again, inform the IP handling your IVA as soon as possible.

q

What if I’m offered a job or promotion abroad?

A

Discuss with the IP handling your IVA if this is a viable option for you currently and act on the advice of the IP.

q

What if I have an accident and can no longer work when I’m in an IVA?

A

Inform your IP and your creditors straight away if this happens. They will work with you to find a solution that works best for you and them going forward. You may be able to lower the payments to an amount you can afford, lengthen the IVA term
or enter into bankruptcy.

q

What if I need to reduce the amount I pay monthly due to redundancy or any other major life changes?

A

Discuss this with the IP handling your IVA and your creditors. Creditors are usually open to this if you let them know as early as possible about your current situation. The IVA term may have to be lengthened in order to accommodate.

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