IVA Answers

Introduction to IVA Answers

Before you commit yourself to a taking on an IVA - Independent Voluntary Arrangement – it is best to make sure that you find out everything that will go in your favour, but also make sure you are aware of the pitfalls.

Going down this path will make sure that you do not have to declare yourself bankrupt and can also make you debt free within as little as 5 years. You will not have to repay the full amount that you owe and while this may seem attractive, it is not a completely pain free approach. Within a year of completing the agreement your credit level will begin to be repaired and you can start again, but for the time that you are under the terms of the agreement you do have restrictions.

There are a lot of things that you may want to find out first, and while you may not like the answers it is best to know in advance what is expected of you.

What Must I Do?

Firstly you must be completely honest about what you can afford to repay. It may be tempting to say you can pay more than you can in order to get the debt paid off as quickly as possible but if in the future you cannot keep up the payments the IVA will fail. This means that you could then have to pay the full amount you owe or will become bankrupt. Alternatively if you try to keep too much money back for yourself the amount that is offered to your creditors in repayment may be so low that they will be refused.

What If My Circumstances Change?

If this happens you must inform the person who is dealing with the IVA on your behalf. If they unfortunately change and become worse they may be able to renegotiate repayments at a lower level. If you suddenly have more money than when you negotiated the terms then there is the expectation that some of that will go towards repaying your debt.

Is My House Safe?

When the figures are calculated, a mortgage payment will be included in your expenses. There should be no reason why your home should be at risk. You will probably need to have your house re valued towards the end of the agreement and if there is equity some of that will have to be taken into account. If the house is in negative equity it is very unlikely that you will be allowed to cut your payments as this loss of equity is not affecting the money you have month to month. It may be best to tell a landlord if you have one as they may wish to know. For many as long as rent is paid they may not mind but it is better to be safe than sorry.

Finally the main thing you may want to consider is the peace of mind you now have. Your interest will not go up so your debt will not increase and you are dealing with your debt. There will be no more contact with your creditors as this will all be done through your advisor.