For us, this is our day job. Our Licensed Insolvency Practitioners who will be overseeing the process have over half a century’s worth of experience between them, and our DebtChampion team are all highly skilled and know what they are talking about.
All that we ask of you is to provide us with information as and when we need it and to be available to have a chat whenever we need to run through anything with you – we will handle the rest.
Provided you are an individual with regular income and a surplus once all your living costs have been taken into account, ignoring the amounts you currently pay to your creditors (or you can be a sole-trader or in partnership, with a steady income stream and surplus) then an IVA will be available to you.
Age is no barrier.
You should have what is called at least three lines of debt owed to two or more creditors (i.e. you should owe at least three creditors some money or only two creditors if you have more than one debt with the same creditor). For an IVA to be worthwhile you should ideally owe at least £5,000.
We do not charge for our initial advice, assessment of your financial position or initial consultation so if the above circumstances do not apply to you, it is still worthwhile getting in touch to see whether or not we can help you and if we can’t, we can point you in the right direction for an alternative solution which may be more appropriate.
We will only recommend an IVA if it is the right option for you. It is our job to make sure you are advised of the best solution for dealing with your debts, whether or not it is a product which we can offer.
You need to have at least 75% of your unsecured creditors voting in favour for your IVA to be approved, and at least 50% of those voting must not be associated with you (e.g. cannot be a family member).
There may be times when an IVA is not accepted by creditors for a variety of reasons. However, we would never recommend an IVA as the right solution for you if we did not think that it has a reasonable likelihood of being accepted.
The most common question!
When we put together your IVA we have to look at how much you earn each month and we take into account reasonable living expenses (not including the payments you are currently making towards your unsecured debts) and, whatever surplus you have available becomes your affordable IVA contribution which you then pay into your IVA each month, for the agreed duration of your IVA.
Our fees are paid from the contributions which you pay in to your IVA – you are not charged in addition to your contributions. You essentially pay the affordable IVA contribution amount each month into your IVA (plus any additional contributions which you may have to make – see below for further information) and this is used to pay our fees and to pay your creditors. It is the creditors who actually agree the basis of our fees as they are the ones who are effectively paying us.
Like other IVA providers, our fees are split into two categories, a Nominee’s Fee and Supervisor’s Fee. The difference being Nominee’s Fees relate to work done before IVA approval and Supervisor’s Fees relate to work carried out after your IVA has been approved right the way through to completion.
Any initial advice, our assessment of your financial position and our initial consultation is absolutely free. We only ask that once you have decided that you are happy with us and have instructed us to start work on putting together your IVA proposal and associated documents that you pay your first affordable monthly contribution into our client account.
We are always upfront and transparent regarding our fees and costs which will be applied to your IVA.
This depends on a few factors which include how much you can afford to pay into your IVA each month, how much you owe to your creditors and also whether or not you own/have a share of equity in a property and whether you are able to reasonably realise that equity.
In most IVAs the contributions paid in are not enough to allow all creditors to be paid in full and will therefore be expected to last for five years. If you own your property/home, then your share of any equity will usually need to be realised into your IVA within the final year. If it turns out that it’s not practical or possible to realise your share of equity, then your IVA would usually be extended for one more year.
If, however you don’t own a property or you live in rented accommodation then the duration of your IVA will typically be five years.
If after calculating your affordable monthly IVA contribution you have enough money to pay all of your creditors in full within say three years, then you will only have to pay enough contributions to pay your creditors in full.
This will all be discussed and explained to you in detail as part of your IVA process.
All of your unsecured debts outstanding at the start of your IVA are included in the IVA process. If you do everything which you say you will do in your IVA proposal then, at the end of the IVA term you will be issued with a certificate of completion and all of your unsecured IVA debts are written off.
Unsecured debts include: –
• Credit cards
• Store cards
• Bank accounts
• Unsecured bank loans
• Other unsecured loans
• HM Revenue & Customs debts
• Shortfall due to finance / hire purchase companies on sale of an asset
• Money borrowed from individuals
• Arrears of Council Tax
However, your IVA does not affect the rights of what are known as secured creditors. This means that you must carry on paying your secured creditors throughout the duration of your IVA – these payments will be included in your monthly expenditure when working out your affordable monthly IVA contribution. Examples of secured debts are: –
• Mortgage and any loans secured on your property
• Vehicle finance and hire purchase assets
• Student loans
There are also debts which will not form part of your IVA and you will need to make sure that these are paid throughout the duration of your IVA (where applicable) and after your IVA has completed if they remain outstanding. Examples of these are: –
• Child maintenance
• Fines i.e. parking fines
• Debts incurred through illegal/fraudulent behaviour
We ask that you let us know absolutely everyone who you owe money to so that way we can review your financial position and provide you with the best advice. We will let you know which of your debts/creditors fall into which category.
If you own or share any equity in your property, more than £5,000, then some of your equity may need to be paid into your IVA to go towards your debts.
This will depend on whether you are able to re-mortgage or obtain a secured loan against the property and it is reasonable for you to do so. If you do have a share of equity and you cannot re-mortgage or obtain a secured loan, then your IVA would usually be extended to provide to pay monthly income contributions for a further year.
If you have a personal pension, only minimum contributions to the pension scheme will be allowed, depending on your age, should they exceed the minimum contribution, creditors will request you to reduce contributions to your pension. We will discuss this with you in more detail during our initial assessment/consultation with you.
There is no requirement to release a lump sum from your pension.
Your state pension is not affected by your IVA.
As part of the terms of your IVA we have to carry out a review of your income and expenditure each year. If it turns out that your disposable income increase, then your monthly income contributions will be increased. Such an increase will be no more than 50% of the increased disposable income.
This also applies in respect of bonus and/or commissions you may have received.
Shortly before your annual income and expenditure review is due we will get in touch with you and be on hand to assist you.
We understand that life it isn’t always plain sailing.
If for whatever reason you think that you might not be able to make a payment into your IVA, then please let us know as soon as possible – we cannot stress enough how important it is to keep us informed.
If your income reduces and you think that you won’t be able to keep up payments at the previously agreed level, again please let us know as soon as possible so that we can review your financial position and see what options you might have available. It is possible that in certain circumstances, allowances can be made however it is crucial you get in touch with us as soon as you think you might miss a payment.
You can get in touch with us by either picking up the phone and giving us a call on 0808 164 3750 (Freephone) or email your dedicated DebtChampion team member.
If you come into some money or additional assets, in excess of £500, whilst your IVA is ongoing, for example if you receive inheritance or win the lottery, then you will be required to make further contributions into your IVA with a view to settling your debts in full.
This will be written into the standard terms of your IVA and is a common clause which is required by creditors when voting on whether or not to accept an IVA proposal.
If you find yourself in a position where you think you cannot make your monthly payment, please get in touch with us ASAP letting us know the reasons why, so that we can review your position. It is possible that in certain circumstances, allowances can be made, however, it is crucial you get in touch with us as soon as you think you might miss a payment.
An IVA is a legally binding contract between you and your creditors. You will have agreed to make payments into your IVA for a certain duration and, in return, your creditors will have agreed that when you have done everything you said you would do, they will write off whatever balance remains outstanding to them at the end of the IVA term. Also, throughout the duration of the IVA your creditors would not charge you interest, chase you for payment or commence legal action against you such as bankruptcy proceedings.
If you do not hold up your end of the bargain, then your IVA will fail. Following the failure of your IVA your creditors are free to chase you for payment and instigate proceedings against you and you may be made bankrupt.
At DebtChampion we like to think that we don’t beat around the bush and will always be upfront and honest with you. The very fact that you are looking at the possibility of an IVA usually means that your credit rating will be poor already.
Yes, an IVA will affect your credit rating for the worst, typically, for a five year IVA, it will be for a period of six years from the date on which your IVA is approved, or can be longer is your IVA last for more than six years.
Once approved, your IVA will be included on the Insolvency Register – this is held by the Insolvency Service which can be accessed by anyone and is available on the internet.
However, unlike Bankruptcy your IVA will not be advertised in the London Gazette (again not that this is usually read by your friends and family) and will not be advertised in your local paper (something which a Trustee in Bankruptcy may decide to do).