Frequently Asked QuestionsTo assist you we have listed below some of the questions that we are most frequently asked along with the answers.
An IVA is an Individual Voluntary Arrangement. It is a legally binding contract between you and the people that you owe money to, your creditors. It is governed by the Insolvency Act 1986. An IVA normally lasts for 5 years. During this time you pay a fixed amount per month and in some cases one-off contributions, often by raising equity from a property. The money that you pay into the IVA is then divided up and paid to your creditors. The total money that you pay will usually be less than you owe but will be accepted as full and final settlement by the people that you owe the debt to. 2. What kind of people enter into an IVA. If you are unable to pay your debts when they fall due then you are insolvent. In such a case you have two options open to you in law. They are bankruptcy or an IVA. The kind of people who enter into an IVA are those who cannot pay their debts when they fall due. They come from all walks of life. 3. Can I do anything else other than entering into an IVA? Some people in your position ask their creditors to enter into informal arrangements to reduce the amount they pay. The problem that you may well face if you adopt this route is that you may take longer to pay your debt and you may in fact be charged a higher rate of interest which means you would actually owe more money than you do now. The Debt People has a sister company, Hamilton Locke, which can advise on Debt Management Plans (DMPs), which can be an excellent way of reducing your monthly payments if you do not qualify for an IVA. 4. How much will I have to pay if I enter into an IVA? This will depend upon your income and expenditure. Each case is different. However you will only pay what you can realistically afford. You will pay a fixed amount per month by standing order and possibly a lump sum, usually in year 4 or 5, if you have equity in a property or other assets. 5. Why should I choose an IVA over say bankruptcy? With bankruptcy your details will be advertised in the local press. An IVA is not. With bankruptcy you may not be able to continue working in your present job. With an IVA your job will not be affected and your employer will not know of it. Once an IVA is approved then the people to whom you owe money are legally bound by the agreement. At the end of the IVA your obligations to your creditors are over. For some people, bankruptcy is the right option and The Debt People will always advise you if this is the case. 6. If I want to enter into an IVA what do I need to do? You will first need to call The Debt People on 08000 285286 for a debt assessment, following which we will send out an IVA pack, if your circumstances qualify you for an IVA. You will need to return all your paperwork and we will then prepare all of the necessary documentation for your approval. We will then contact creditors on your behalf and will continue to deal with them for you throughout your arrangement. We will call a creditors meeting so that creditors can consider your proposal. You will not usually have to attend a meeting and typically most creditors do not attend in person and vote by proxy (postal vote). You can attend if you wish although a person from The Debt People will chair the meeting, keeping you fully informed throughout the process. 7. Will I have to sell my house? No. With an IVA your house will be safe however you may be asked to raise some of the equity in your house to be used to pay your creditors. We will advise you fully on this point. 8. What costs are involved in setting up an IVA? You simply make your contributions into the IVA and we agree our fees with the creditors, who then allow us to deduct those fees from the funds we have collected on their behalf. 9. Will the people that I owe money to agree to an IVA? At the creditors meeting that we have described at question 6 above 75% of the votes of your creditors must be in favour of the IVA. At the meeting your creditors could suggest changes to your IVA proposal and you can then choose whether to accept them or not. 10. Is there anything else that I should be aware of? With an IVA you will probably pay more than if you were made bankrupt. This is because payments made under bankruptcy usually last for a shorter period than an IVA. However the effects of bankruptcy are much more severe than with an IVA. Some people faced with overwhelming debts choose bankruptcy. With bankruptcy you would raise funds by selling any assets that you own – for example your house – in order to pay the people that you owe money to. There are however serious implications to being adjudged bankrupt. These include having your details advertised in the newspapers and not being able to do certain jobs. 12. What are Debt Management Plans? Some people in debt choose this option, usually if their debts are too low or if they do not qualify for an IVA for some other reason. The Debt People have a sister company, Hamilton Locke, which operates to the same high standards of quality and customer service and can give you the best possible advice on a Debt Management Plan. With a DMP you will make a single monthly contribution in exactly the same way as with an IVA, and Halilton Locke will distribute the money to your creditors, after deducting an agreed fee. 13. What about Loans and Re-Mortgages? If after discussing your situation it appears to us that the best way forward for you would be a re-mortgage then we may advise you to consider this option in order perhaps to consolidate your debts into one single payment. We may also advise you to consider a loan which is secured on your property – often referred to as a second mortgage. As with any advice that we give to you this will depend upon your individual circumstances and we will advise you on these matters only if they are in your best interests. |
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