Commonly Asked Questions Regarding IVA's

If you are trying to tackle your debt problems then you may have a number of options available to you such as debt management plans, trust deeds, bankruptcy or an IVA.  If you have decided that an IVA (individual voluntary arrangement) is the best option for you, then you may have a number of questions that you would like answered such as:

• How much will I be paying each month to my debts?  This is an important question and probably the one that you will most want answered.  The reason you are in this situation at the moment is because you are finding it difficult to pay your debts each month so it would make sense that you would want to know how much you will be expected to pay under the IVA.  The good news is that when your IVA is set up, the amount that you can afford to pay each month is taken into account.  Your income and your expenditure is looked at and then your disposable income is calculated.  Living expenses will be taken from this and a figure for your debts will then be calculated.  You will usually be expected to be able to afford at least one hundred and fifty pounds each month if you want to put an IVA in place.
• For how long will the IVA be in place?  IVAs only last for five years and this is probably the biggest advantage of it.  Provided you have stuck to the IVA terms for the five years and have been paying the agreed amount each month, your remaining debts will be written off.  If you come into money during the term of the IVA, then you may be able to reduce the length of it.
• Will I have to give up my home?  Your home will not be at risk if you take out an IVA.  In fact, taking out an IVA, will actually protect your family home from creditors that you owe money to.  However, you will have to continue paying any mortgage payments or any loans that have been secured on your house.  These will not form a part of the IVA.  The amounts that you need to pay these bills will have been taken into consideration before the amount for the IVA was calculated.  It is also worth noting, that you might be requested to release some equity from your home in order to put towards your debts.
• Will this affect my credit rating?  Your credit rating is going to be affected whenever you enter into any debt management solution.  The fact that you have an IVA in place is going to show up on your credit records and may prevent you from getting any further credit although this is not a bad thing.  However, it could also affect your ability to get mobile phone contracts.  You can expect your credit rating to be affected for the term of the IVA and for at least another year afterwards. However, if you have been having trouble paying off your debts already, then your credit rating may already be affected.