How will an IVA affect my credit rating?

Your credit rating will be affected during the period of the IVA and for 6 years following completion. However, if you have previously missed payments or made payments after the due date, then your credit rating may already be affected.

On completion of the IVA, creditors will mark debts as fulfilled. It will take time to rebuild your credit rating; therefore we recommend that you send a copy of your completion letter to credit reference agencies.

Frequently asked IVA questions

Q: Will an IVA prevent creditors from taking further action

A: An IVA is a legally binding contract between you and your creditors. Providing you keep to the terms of the IVA, then yes you will be protected from creditors included in the agreement taking further action to recoup debts owed to them.

Q: Can I enter an IVA if I already have a CCJ?

A: Yes you can. In fact by entering an IVA, you can avoid further action being taken against you.

Q: What is the difference between a secured and unsecured debt?

A: A secured debt means a debt that is secured against a property or asset. Typical examples of secured debts include mortgages, secured loans and hire purchase agreements. Unsecured debts are not secured against something you own. Examples of unsecured debts include bank overdrafts, credit cards and personal loans.

Q: Can an individual creditor refuse to accept an IVA

A: IVAs are subject to creditor agreement – so creditors must agree to the proposal for the arrangement to begin. If a single creditor refuses to accept the IVA, the IVA can still go ahead providing the single creditor does not hold 25% or more of the debt value. For an IVA to begin, it needs to be accepted by 75% creditors (by debt value). Once an IVA is accepted all creditors will be bound to the terms of the arrangement.

Q: Does an IVA cover all debts?

A: Only unsecured debts (debts that are not secured against a property or asset) can be included in an IVA. Unsecured debts include loans, catalogue accounts, store cards, overdrafts and credit cards. There are certain types of unsecured debts that cannot be included in an IVA; these include student loans, child maintenance and arrears on household bills. You must continue to make repayments on household bills, secured debts and mortgage / rent.

Q: do I have to be a homeowner to get an IVA?

A: There are specific criteria for qualifying for an IVA but it makes no difference whether you are a homeowner, tenant or even living at home with your parents. To find out if you could qualify for an IVA, call us on: 0800 015 3135†.

Q: Can I cancel an IVA once it has been set up?

A: You will have a cooling-off period of 7 working days from the date on your signed and returned Client Information Form in which you can cancel the IVA Advisory Service. This must be sent in writing which can be posted to Baines and Ernst Ltd, Lloyds House, 18/22, Lloyd Street, Manchester M2 5BE or by Faxing us on 08448 262 622. The IVA Advisory Service forms the initial stages of the application. Therefore it is essential that you know that you cannot cancel the IVA once it begins as it is a legally binding contract.

Q: How long does it take to set up an IVA?

A: Set up times can vary as the process depends on your personal circumstances and creditor agreement. It’s essential you provide thorough details on documents and return all paperwork on time to make sure the process moves as quickly and as smoothly as possible.

Q: How much does an IVA cost?

A: All costs associated to the Individual Voluntary Arrangement will be included in the payments you make into it every month. You will be informed about these costs in a written proposal from your appointed Insolvency Practitioner before you commit to an IVA. Click here for details regarding IVA fees.

Q: What happens if I just stop paying into the IVA?

A: If you do not keep to the terms of the IVA, then your IVA will fail and your Insolvency Practitioner has the right to petition for your Bankruptcy. Creditors can also request that you are declared bankrupt. Bankruptcy is a serious debt solution due to the severe repercussions it can have on your home, life, business and assets.

Q: What if my circumstances change?

A: If your circumstances change it’s essential you speak to your Insolvency Practitioner who could request a variation to reflect your new situation.
For confidential debt advice, call Direct Debt Solutions on 0800 015 3135†.