Frequently asked questions about debt (FAQ)

An IVA prevents creditors from taking action against you and your property. However, it is important to note that if you are a homeowner and there is equity in your residential property you may be asked to refinance in the final year of your IVA which could attract a higher rate of interest. If you have equity and you are unable to refinance the term of the arrangement will be extended by 12 months. Where equity in the property is minimal (below £5,000) then no refinance or extension may be required.

If there are any circumstances where we believe that there is a risk that your creditors may not approve your IVA then this will be discussed with you prior to proposing an IVA. Credittors have to decide whether to accept, reject or modify the terms by voting at a creditors meeting. This meeting is held virtually, creditors usually send their decisions by post or email.

In order for an IVA to be accepted you require 75% of the creditors that do vote at the meeting in value to accept the IVA in order for it to be approved. Creditors do not have to approve an IVA.

Yes, there are fees involved in an IVA if you choose a solution with us, these fees are taken from your monthly payments you make. For full details of our fees please click here.

Examples of unsecured creditors whose debt can be included in an IVA are:

• Credit cards and loans
• Debts owed by you and someone else “jointly owed”
• Monies owed to individuals, including friends and family
• Debts due to HMRC including overpaid benefits, self assessment tax, VAT
• Arrears of council tax and utilities
• Trade creditors who supply you if you trade as self-employed
• Shortfall once a property has been repossessed

Debts that cannot be included in an IVA include:

• Matrimonial debt – monies owed to an ex-husband or wife that a court has decided should be paid
• Student debt
• Court fines or fines for traffic violations

Yes, an IVA will affect your credit rating for a period of 6 years and will be shown on your credit file.

If your IVA is approved, creditors cannot pursue you for payments or take further action. Creditors are required to send you statements by law, and these will continue.

Yes, we can approach your creditors to see if they would consider an early settlement if you are in a positon to offer creditors a lump sum, for example, if you have family that would like to help you.

Whilst you are in an IVA there are restrictions on your expenditure. If you find you cannot maintain your payments, your IVA terms will normally allow your Supervisor to agree to reduce your contributions by up to 15% or allow a payment break without seeking creditors agreement. If further changes are required it is possible to go back to creditors to obtain their permission.

It is important that you keep in touch with your Supervisor if you struggle to meet your contributions. We understand that most of us encounter unforeseen problems and we need to know so that we can help.

Please note, if you do not maintain your payments and your IVA fails there is a risk that your creditors could petition for your bankruptcy.

Once you have made your final payments to your IVA it can take up to 3 months to complete the closure process. A final report is then sent to you and your creditors. Any remaining balance outstanding to your creditors which are included in the IVA are written off.

Yes your details are entered onto the Individual Insolvency Register for the period of the IVA. This is a public register.

No there is no application fee.

No, there are no monthly payments required.

Yes, there is a criteria, which is as follows:

• You have qualifying debts of less than £50,000.
• You don’t own things of value or have savings over £2,000 (in addition, you will be able to keep any motor vehicles worth up to £4,000).
• You have £75 or less spare each month after paying your household bills.
• You’ve lived or worked in England and Wales within the last 3 years.

The debts that you can include in a DRO are:-

• Loans
• Overdrafts
• Catalogues
• Credit cards
• Rent, council tax
• Utility and phone bills
• Benefit overpayments
• In-store credit agreements
• Money owed to HM Revenue & Customs, like income tax or national insurance contributions.

While you are on a DRO, creditors must stop all collections activity. They are not allowed to add interest and charges and cannot take further action against you.

There is a locator tool on MoneyHelper’s website which will direct you to intermediaries in your area that can assist you with applying for a DRO.

What is a Debt Relief Order (DRO)? | MoneyHelper

Your DRO will be revoked and if it is found that you knew your debts were potentially higher than £50,000 before the application.

The restrictions of a DRO mean that you cannot:

1. Borrow more than £500 without informing your lender about your DRO.
2. Act as a director of a limited company.
3. Create, manage or promote a company without the court’s permission.
4. Manage a business without telling your suppliers about your DRO.

Yes your details are entered onto the Individual Insolvency Register for the period of the DRO. This is a public register. Usually this is for 12 months unless the period is extended due to careless or dishonest behaviour.

A DRO will affect your credit rating and stays on your credit file for six years after the DRO starts.

You will not receive any confirmation that the DRO has come to an end. If you want evidence that your DRO has ended, you can print off a copy of the entry into the Insolvency Services Individual Insolvency Register which will note the end date.