• How long does an IVA last?
• What debts can be included in an IVA?
• What debts cannot be included in an IVA?
• What happens when an IVA has been completed?
• What happens if I can't make the payments on an IVA?
• What if I get a financial windfall during the term of an IVA?
• Will I have to sell my house if I set up an IVA?
• Do I have to use an Insolvency Practitioner or can I set up an IVA on my own?
• Will an IVA affect my future credit rating?
• Who will know about an IVA?
• Will I need to open a new bank account?
• Can I stay in business?
• Can I complete my IVA earlier than the agreed time?

An IVA normally lasts for five years (60 monthly payments), however it is also possible to complete an IVA in a shorter period, especially if you find yourself with a lump sum and want to make a full and final settlement to your creditors.

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• Bank overdrafts
• Personal loans
• Credit or store cards
• Outstanding VAT
• Outstanding inland revenue debts

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• Mortgages 
• Loans secured on your property
• Hire Purchase Agreements (except shortfalls)
• Magistrates Court Fines
• Speeding fines or parking tickets
• Debts incurred through fraudulent activity
• Child maintenance / Child Support Agency arrears
• Rental arrears

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Within three months of the final payment the Insolvency Practitioner will give you a "Statement of Completion". A copy of this will also be sent to the Insolvency Service for their records. At the end of the IVA you will be free of debt.

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You should contact your Insolvency Practitioner immediately if there is change in your personal circumstances such as illness, redundancy, relationship breakdown or bereavement which may cause you to experience problems keeping to the repayments. 

Your Insolvency Practitioner will prepare a revised income and expenditure schedule, based on your change in circumstances. If required, a further meeting of creditors will be held to a request a change to the original agreement. 

During the term of the IVA, in an emergency situation, you may be granted permission by the Insolvency Practitioner and creditors to miss two payments

However, if you miss payments without permission this will be deemed as a default of the IVA. Serious defaults can result in the failure of the IVA and may lead to the Insolvency Practitioner commencing bankruptcy proceedings against you.

6. What if I get a financial windfall during the term of an IVA?

Your IVA will contain a 'windfall' clause, meaning any assets such as lottery winnings, bonus payments, gifts or inheritance have to be declared to the Insolvency Practitioner and paid into the IVA for the benefit of the creditors.

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With an IVA you will not be forced to sell your home. However, your creditors might want a proportion of any equity to be released and paid into the IVA at the end, for distribution to the creditors. Usually this would amount to 75% of the equity.

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8. Do I need to use an Insolvency Practitioner or can I set up an IVA on my own?

You will not be able to arrange an IVA directly with your creditors. An IVA can only be proposed and supervised by a licensed Insolvency Practitioner. 

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For the duration of the IVA you are not allowed to take out any further unsecured credit such as credit cards, store cards, personal loans. 

A note will be placed on your credit file informing potential lenders to the fact that you have entered into an IVA. This will remain on your credit file for six years (one year more than the IVA). 

While there is a record on your credit file that you have entered into an IVA, some high street lenders will reject you for credit. However there are other specialist lenders who specialise in mortgages or secured loans for people with previous credit problems.

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10. Who will know about an IVA?

Unlike bankruptcy your IVA will not advertised in a local newspaper. Your employer will not know unless you decide to tell them. 

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11. Will I need to open a new bank account?

Whilst your IVA proposals are being prepared, you might have to change bank accounts because the banks have the right to "off-set" money owed to them.

This means if you have debts with your bank such as a credit card or personal loan, and you pay your salary into the account, the bank may remove the money from your account to "off-set" against this debt. 

If you are not overdrawn and do not have loans or credit cards with your bank then you will not need to open a new bank account. 

12. Can I stay in business?

Unlike bankruptcy procedures, there is no restriction on your business activities.

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13. Can I complete my IVA earlier than the agreed time?

It is possible to complete an IVA before the five year period ends. For instance you might get a windfall of money such as a gift from a friend or relative or be left some money in a will which provides enough funds to pay off the outstanding amount left on your IVA. 

Under these circumstances your Insolvency Practitioner will arrange another creditors meeting to offer your creditors a lump sum early settlement which will allow you to exit out of the arrangement earlier. 

The likelihood is that most creditors will agree to this as they will be getting paid much sooner than in the original agreement. 

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