IVA - Frequently Asked Questions

Your personal pension is not at risk on an IVA. However, you may be required to reduce or suspend payments into it for the duration of the IVA with the intention of using this money towards the IVA.

Income received from either a state or other pension schemes are considered as income when calculating how much you can afford to pay into an IVA.

If you have made excessive contributes into a personal pension plan, just before applying for personal insolvency, which is what an IVA is, then this may be considered to be an attempt to hide money from your creditors. In the case of bankruptcy, this transaction could be reversed by court order and the money taken to paid towards your debts. Your creditors would require the same in order to approve the IVA proposal, after all an IVA is intended to produce more for the creditors than bankruptcy.

You don’t have to, but we appreciate that entering into an IVA is a big step and that many of our clients will want to meet the people who are dealing with their affairs. That is why we will always offer the opportunity for you to meet one of our representatives.

It depends on the car and your circumstances. This is the case for all high value assets. It is normal to be allowed to keep a car worth a reasonable amount, especially if needed for work or family commitments. The conditions are not as strict as with bankruptcy. For cars on Hire Purchase, this debt is secured and therefore can't be included in the IVA, the HP company will simply repossesses the car if your do not maintain payments. Normally you will be allow to keep making HP repayments while on the IVA, however once payments are completed, you will be expected to make increased payment into the IVA now that your outgoings are lowered. It may be the case that you decide to cut your losses and return the car to the finance company. In this case the outstanding balance is no longer secured and can be included in an IVA proposal.

No, you must be technically insolvent. There are two basic tests of insolvency.

1. Your liabilities (debts) are greater than your assets.
2. You are unable to pay your debts as they fall due.

In some circumstances your home may be excluded from the arrangement. However, if you have equity in your house, this will be taken into account when making an offer to creditors. You may have to release some of the equity in your property at some stage during the IVA.

Your creditors are only going to approve an IVA if they consider they will get more money back than via bankruptcy. If the equity in your property is more than your unsecured debts, then they could get it all back by bankrupting you, and forcing you to sell your home.

How your homeowner status affects your IVA proposal is complex and depends on many factors such as

1. Your current mortgage repayments.
2. How much of the property is yours in the case of joint ownership.
3. The amount of equity in the property.

Insolvency Practitioners are licensed to practice by one of the following bodies, who ensure compliance and regulate their service:

• Institute of Chartered Accountants of England and Wales (ICAEW)
• Association of Chartered Certified Accountants (ACCA)
• Insolvency Practitioners Association (IPA)
• The Law Society
• Institute of Chartered Accountants of Scotland (ICAS)
• Department of Trade and Industry (DTI)

An IVA is a legal process. Once it is set up it cannot be cancelled simply because you have changed your mind. However, if your circumstances change and you can no longer afford the repayments, then your IVA can be terminated. You may seek to enter a Debt Management Plan, or your creditors can take whatever alternative action they consider appropriate.

You will have to come to an informal arrangement with your creditors (or use the services of a debt management company) to repay your debts or declare yourself bankrupt. We wouldn't make an IVA proposal without a high confidence of acceptance.

There is no exact answer to this as it depends on personal circumstances. As a rule of thumb, equity is released to a maximum of 85% loan to value and any increase in mortage costs must be no more than 50% of your IVA payment.

Your landlord need not be aware of the IVA.