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10 Reasons an IVA Is Worth It

Written by Alex Swindells on . Posted in Debt help, IVA.

Do you have multiple debts to manage? Are you thinking of taking out an Individual Voluntary Arrangement (IVA)? Are you wondering if IVAs are worth it for you?

IVAs are a way to try and get out of financial difficulties, but they are not the only way to do so. There are different debt solutions available, so make sure the one you choose is right for you.

Having debts can be stressful, especially if you feel isolated by it, and it can seem to become more and more overwhelming until they start impacting your mental health. If this is you, there is help available. 

If you do meet the criteria, there are many reasons why applying for an Individual Voluntary Agreement could help you, and they can come with a lot of benefits for your situation.

What Is An IVA?

An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors, that usually enables you to pay back one monthly affordable amount and freezes the interest on your unsecured debts. It is overseen by a licensed Insolvency Practitioner. If you maintain regular payments as agreed, it usually lasts for 5-6 years. After that, the remaining debt you have not yet paid is written off.

An IVA is usually available for people who owe more than £5000 and do not have enough money to repay those debts.

There are a range of advantages for IVAs, from realistic payments to protecting your assets. Here is a list of 10 reasons why having an Individual Voluntary Arrangement could benefit you and your financial circumstances.

1) You only repay what you can realistically afford

Coins stacked up next to a jar of coins

Debts can seem more overwhelming and stressful when you have to pay off large amounts, especially if that amount is not something you have access to without going into more debt. By having an IVA, you only pay back an amount that you can afford.

The amount you can pay back is worked out after considering the amount of money you will need to pay for necessities, including food and childcare. Whilst you will still need to pay back a minimum of around £90 every month (dependent upon circumstances), this will encompass all the debts you include in your IVA and is usually a much lower amount than what you would normally pay.

2) Overturns a CCJ or bankruptcy order

Wooden gavel in a courtroom

A CCJ is a County Court Judgement. It is when someone takes legal action against you for not paying your debts, and the court decides that you owe your creditor money. It will contain how much you owe, how to pay it and a deadline by which to do so.

If you have an Individual Voluntary Arrangement, you no longer have to pay the CCJ directly. Whilst your IVA is in place the creditors included in it cannot take any further legal action against you to recover those debts including petitioning for your bankruptcy.

3) Stops all of your creditors contacting you over a debt

Woman putting the phone down in her office

Part of the stress that accompanies debts is the constant contact with creditors, whether that be via phone calls or letters. When you have an IVA, your creditors are legally obliged to stop contacting you to make payments towards debts, giving you peace of mind.

Your creditors are legally required to provide you with informational documents such as an annual statement. However, the rest of their contact will be with your Insolvency Practitioner (IP), who works with you concerning your IVA.

4) Writes off the debt completely after 5 years

Money in jar with green leaf growing on top

One of the biggest reasons why IVAs are so beneficial is that after the completion of the agreement, any remaining debt will be written off no matter how much you still owe. So at that point, you would be free of any debt that was included in your IVA, and your disposable income would be yours to do with as you wish.

5) Protects your career and job

Man shaking hands with executives after agreeing a new contract for job

If you go bankrupt, it can limit the type of job you are allowed to have, or the industries you can work in. For example, going bankrupt can mean you are no longer able to be the director of a limited company.

In contrast, it is significantly less likely that your job or employment will be impacted by taking an IVA, and sometimes you don’t even have to inform your employer that you have one.

If you have any questions about how an IVA may impact your job or career, check your employment contract and see if it mentions anything about having an IVA.

When considering any insolvency solution always check with your employer to see if there could be any consequences to your role.

6) Your assets are completely protected

Padlock on credit card

Assets include your car and home, and the threat of losing them can be a source of stress when debts are involved. With an IVA, the creditors involved are unable to repossess your home or other assets to go against the remaining balance of your debt.

You can sell some of your assets if you wish to, and this is something you can discuss with your IP. They may even encourage it to help pay off your debts quicker, but you are not at risk of losing your home, or anything required for living day to day.

7) No interest charges

Interest rates login screen on laptop with calculator next to it

Interest can make debts larger, especially if you can only afford to pay the minimum amount each month. When entering an IVA, the creditors involved set their debt at the amount that was owed on the date that it was approved. This means no further interest or charges can be applied whilst your IVA remains in place.   

8) Prevents legal action

Lawyer sitting down with man and discussing situation

If you are worried about legal action resulting from your debts, an IVA could be the solution you need.

If you have an IVA and you comply with its terms, your creditors cannot take legal action against you. This includes stopping bailiff action on any included debts.

9) All payments are included in one payment per month

Asian woman using smartphone buying online shopping by credit card while wear sweater sitting on desk in living room at home.

Having multiple debts can cause anxiety, especially if those debts are to numerous creditors. Instead of paying multiple amounts towards different debts, an IVA means you only pay one amount a month, which is the affordable amount you established with your IP. How that amount is divided between your creditors is worked out by your IP, allowing you to repay your debts with less stress and through one easy monthly payment.

10) A whole host of debts can be included

Close-up shot of family gathered together at wooden table and keeping records of expenses, woman taking notes in notepad

A large range of debts can be included in your IVA, which can make them easier to handle for you and your finances. These include credit card debts, personal debts and council tax debts to name a few.

Some debts cannot be included, such as mortgages and court fines, but the ones that are included can reduce the burden on your finances that can come with not having a debt solution.

When seeking help for your debts, you must find the solution that is right for you. Have a look and see whether a Debt Relief Order (DRO) or IVA would suit you and your circumstances more.

If you need help with your finances, you can apply for an IVA with Swift Debt Help, and they will help you manage your debts going forward.

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Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Five and twenty pound notes laid out on table

How To Pay Off Debt When You’re Unemployed

Written by Alex Swindells on . Posted in Bankruptcy, Debt help, IVA.

Unemployment can be stressful, particularly if you aren’t prepared for it when it happens. Not only do you have the pressure of looking for another job whilst trying to pay your utility bills and rent/mortgage, but if you’re already in debt, then this can add further stress if you’re unable to make regular payments. 

The average UK person has an unsecured debt of £3,817. The types of unsecured debt include credit cards, personal loans, or overdrafts. 

And, of course, if you’re unable to pay for the cost of living, you may see yourself going even further into debt with no means to repay your creditors. 

Paying off debt while unemployed can be hard; however, there are actions you can take to help limit the amount of credit you use. 

Additionally, there are debt solutions available, such as a DRO (Debt Relief Order) or a DMP (Debt Management Plan), that can help to relieve your financial stress.

Ways to Help Reduce Debt:

It is worth getting in touch with your creditors to explain your unemployment status and, because of it, that you’re struggling to make repayments. Your creditors may give you some breathing space on the proviso that you’ll restart paying your debt once you’re back at work. 

In the meantime, consider the below points:

  • Try to avoid further use of your credit card or dipping into your overdraft. 

Also, don’t be tempted to increase your overdraft or credit card limit since the credit will only help you temporarily, and you’ll put yourself further into debt, particularly if there’s interest to pay, which there generally is.

To help prevent you from using more credit, cut down on your expenditures. Only buy the necessities. Set out a budgeting plan and stick to it. With any money left over, use it to slowly start chipping away at your debt. 

  • Avoid taking out any more payday loans. 

Increasing your debt whilst you’re unemployed will make your situation worse. This is especially the case with payday loans because they tend to have very high-interest rates. 

Options for Debt Help When Unemployed

If you’re in debt and without a job, then it may feel like there aren’t any means to ease your financial situation.  

However, some options may be available to you if you meet certain requirements.

Below, we have provided a summary of these options to help with your debt.

1. Breathing Space

If you live in England or Wales, you can get temporary protection for up to 60 days from your creditors while you consider your options and get debt advice. This is a Government scheme called ‘Breathing Space’.

If you receive it then:

  • enforcement action cannot be taken against you
  • your creditors cannot contact you about debts included in your Breathing Space
  • your creditors cannot add interest or charges to your debt, however you will ultimately remain responsible for your debt repayments

To apply for the ‘Breathing Space’ scheme, you need to talk to a debt adviser who will check you are eligible. If you are, then will submit an application on your behalf. You can look for a ‘debt adviser’ on the MoneyHelper website.

2. DRO (Debt Relief Order)

A DRO allows your debt, and any interest owed, to be put on hold for twelve months. 

To be able to apply for a DRO, your debt must not exceed £30,000, you must reside in England, Wales, or Northern Ireland, and you can’t be a homeowner. 

Once you have a DRO in place, your creditors will be unable to take legal action against you.

After twelve months, when the DRO is complete, if you continue to meet the eligibility criteria, then any outstanding debt will be written off. 

Although this can be a useful solution for many people, one essential criteria that must be met is that you have less than £75 per month left over after paying your essential bills. If you get back into work during the twelve-month period, and you have more than £75 available then it is likely that you will have to find an alternative debt solution.

Woman paying with card via her phone

3. Bankruptcy

Bankruptcy could be a debt solution to consider. This is a legal status where your valuable assets (these do not include ‘tools of the trade’ or items that are necessary for living, such as clothes and furniture) are sold to pay what you owe to your creditors.  

You can file for bankruptcy regardless of how much debt you’re in. When applying, you’ll need to pay £680 to the Insolvency Service. 

Once you’re declared bankrupt, creditors can no longer take legal action against you. 

The details of your bankruptcy will be published on government-owned websites; the Gazette, and the Insolvency Practitioner. 

Additionally, the details of your bankruptcy will go on to your credit report and will remain there for six years.

There are bankruptcy restrictions that you’ll have to abide by, but you are usually released from these after twelve months.

Bear in mind that people in receipt of benefits, with no other income, will not be asked to make a monthly payment contribution into the bankruptcy to reduce their debts. However, if a person does become employed during their bankruptcy, they may be required to make regular monthly contributions.

4. DMP (Debt Management Plan)

A DMP is an informal arrangement between you and your creditors where you use a third-party company to set up a payment plan to pay off your debt. 

Your financial situation will be assessed and a figure decided as to what you can realistically afford to pay each month. 

You’ll still have to pay the full amount that you owe to your creditors; however, since your monthly payments will be reduced, your finances will be a lot easier to manage. 

Additionally, the payment plan is flexible, so if your situation changes, then a new amount that you pay each month can be negotiated.

This is a suitable option for you if you have many unsecured debts (non-priority debts). 

The DMP will come to an end once all of your debt has been cleared. 

Using a calculator for debt management

5. Individual Voluntary Arrangement (IVA)

An IVA (Individual Voluntary Arrangement) is a legally binding but flexible agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way over a set period of time. 

Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage, bills, and food. 

Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms until your circumstances change.

If you find a new job, and your income increases, then get in touch with your Insolvency Practitioner who will reassess your circumstances. If you can afford to pay more towards your debts, then you will be required to do so.

We hope that you’ve found this blog useful by discovering ways to help you out of debt.

If you want to find a debt solution that is right for you, then get in touch with Swift Debt Help, and one of the experienced members of the team will call you to discuss your options. 

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Pound notes iva debt solution

IVA or Debt Relief Order: Which Is Right For Me?

Written by Alex Swindells on . Posted in Debt help, IVA.

IVA or Debt Relief Order -If you’re in debt and are struggling to find a way to repay your creditors, then there are several formal, legally binding debt solutions that could help you to clear your debts in a more manageable way. You may have heard of an IVA or a DRO but are wondering exactly what each of these debt solutions are. So, we have put together a brief summary of each debt solution below.

What is an IVA?

An IVA (Individual Voluntary Arrangement) is a legally binding agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way. Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage, bills, and food. Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms. 

What is a DRO?

A DRO (Debt Relief Order) allows your debt, and any interest owed, to be put on hold for twelve months. After this time, if you continue to meet the eligibility criteria, then any included debt will be written off. A DRO is an alternative to bankruptcy if you have limited assets and affordability. 

Which is better? IVA or Debt Relief Order?

Now you understand what an IVA and a DRO is, you are probably wondering which would be the best debt solution for you. Below, we have put together a list of some of the pros and cons, which will hopefully help you decide on whether or not an IVA would suit your financial situation, or if a DRO would be the right solution to help you out of your debt.

IVA Pros and Cons

IVA Pros:

✓ Write off unaffordable debt. At the end of your IVA, any outstanding debt will be written off.

✓ You only pay what you can afford. The payment is tailored to your circumstances. As previously mentioned, your IP will assess your income and expenditure to ensure you’ll have enough money for necessities. 

✓ You will no longer be harassed by creditors and/or bailiffs for payment. As long as you stick to your IVA agreed terms, legal action, such as CCJs, cannot be taken against you.

✓ Business owners can continue to trade. 

✓ An IVA is an option for homeowners.

✓ Interest and charges will be frozen. As long as you stick to your agreed terms, your creditors will not be able to add on any extra charges.

IVA Cons:

X There’s still the risk of bankruptcy if the IVA fails. 

X An IVA could affect employment. This does depend on the sector you work in, or are considering working in. For example, working in the financial sector, there may be certain conditions in place regarding IVAs.

X It will negatively impact your credit rating. An IVA will stay on your credit file for six years, which will affect your ability to apply for loans, car finance, or a mortgage.

X You have to follow a strict budget. 

X An IVA isn’t private. It will be registered on the Insolvency Register, which anyone can access

X If you are a homeowner, you may need to release equity from your home to pay off some debts.

DRO Pros and Cons

DRO Pros:

✓ Any future interest and charges will be frozen on any debt you owe. 

✓ Your creditors will no longer be able to take legal action against you.

✓ Your DRO will only last twelve months after which any debts will be written off.

✓ This debt solution is one of the fastest ways to clear your debts.

✓ No monthly payment

DRO Cons:

X To be considered for a DRO, you must meet certain criteria, such as your debts must not exceed £30,000 and you must reside in England, Wales or Northern Ireland. Also, your surplus income must not exceed £75 per month.

X Homeowners are not allowed to apply for a DRO.

X A DRO isn’t private. It will be registered on the Insolvency Register, which anyone can access.

X If your situation changes, and you no longer meet the DRO criteria during the 12 month period, the DRO will be revoked. 

X It will negatively impact your credit rating. A DRO will stay on your credit file for six years, which will affect your ability to apply for loans, car finance, or a mortgage.

So, an IVA vs a Debt Relief Order: which is the right debt solution for you? Hopefully this list of some of the pros and cons for each will have helped you to decide. However, If you’d still like further information on IVAs or DROs, please contact us, and we’d be happy to answer any questions you may have.

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May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

IVA Protection

What Protection Does An IVA Offer?

Written by Alex Swindells on . Posted in IVA.

An IVA (Individual Voluntary Arrangement) is a legal agreement that can be arranged with your creditors in order to pay back some or all of your debt. If your application for an IVA is successful, then the agreed payment plan will be set up for you to pay off your debt over a period of time (typically five years) through monthly payments. Once the IVA is in place, your creditors will have to stick to the agreement. 

You might be ready to apply for an IVA, but if you’d still like to know how this debt solution can protect you, then consider the following five benefits of having an IVA below.

1. Debts cannot rise

approving an iva

Once an IVA has been approved, your creditors will not be able to add on any interest or extra charges. As long as you keep up with your repayments and follow the terms of your IVA, then your debt will not increase.

2. Your assets are protected

There are a few common questions asked by those who are considering different debt solutions, such as, will I lose my house with an IVA? The short answer is no, unless you have volunteered to sell it to clear some of your debt. Once the IVA has been approved, your unsecured creditors cannot take further legal action to enforce the debt, such as applying for a CCJ (County Court Judgement) or instructing bailiffs to seek possession of your assets.

3. Protection from changing circumstances

During the lifetime of your IVA, it is expected that your situation will more than likely change. For example, if the agreed IVA payments become unaffordable due to a reduction in income, this does not mean that the IVA automatically fails. Your IP (Insolvency Practitioner) will usually be able to grant you a payment reduction (up to a certain level) and you will also have the ability to request more significant changes to the arrangement through what’s known as a Variation Meeting. This provides an opportunity for you to put forward a revised proposal, detailing any changes in circumstance, for your creditors to consider.

4. Protection from bailiffs

court hammer

Your creditors will not be able to take legal action against you once an IVA has been approved, which means, if you stick to the terms of your IVA, you should not have to worry about being approached by bailiffs. However, it usually takes around four weeks for an IVA to be set up, so during this time, you could still be contacted by people trying to collect money to repay debt. If this happens, you should be honest, and explain that you’re in the process of setting up an IVA.  

5. Pay what you can afford 

When setting up an IVA proposal, your IP (Insolvency Practitioner) will arrange a payment plan by, first, taking into account your income and expenditure. This ensures that you’ll only repay your creditors an amount that you can realistically afford which will allow you to have enough to pay your rent/mortgage, bills, and necessities each month. This is followed up by a yearly review whilst the IVA is in place which will, again, take into account your particular circumstances, ensuring that you will not be paying an unaffordable amount.

These are just a few of the ways that an IVA can protect you and, ultimately, help you to find a manageable solution for your debt situation.

If you want to find out if an IVA is a suitable option for you, then please contact us, and we’d be happy to help.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

house with keys

How to Get a Mortgage After an IVA

Written by Alex Swindells on . Posted in IVA, Mortgage.

An IVA (Individual Voluntary Arrangement) is a legal agreement with your creditors to pay back some or all of your debt. Your IP (Insolvency Practitioner) will arrange a payment plan on your behalf, taking full consideration of your income and expenditures. You’ll repay your creditors over a period of time, usually through set monthly payments, and, once approved, your creditors will have to stick to this agreement.
Getting a mortgage after an IVA can be challenging; however, there are things you can do to increase your chances of being accepted by a lender. Below, we have briefly summarised some steps you can take, and things to be aware of before contacting lenders, so keep on reading to learn how you can get a mortgage after having an IVA.

Getting Ready

IVA completion certificate

An IVA completion certificate can be used to show lenders that you’ve successfully completed your IVA, having made all repayments, which proves you’re no longer bound by an agreement with your creditors. The certificate can be obtained from your Insolvency Practitioner. As part of the completion process your Insolvency Practitioner will issue this certificate directly to you as well as to all of your creditors.

Saving up for a deposit

It is unlikely you’ll be able to get a mortgage with a small deposit, such as a 5% or 10% deposit, until the IVA has been removed from your credit report. It will take six years–from the date the arrangement was approved–for the IVA to disappear from your credit report.

Once your IVA has completed, you should have some disposable income that you can put towards saving for a deposit. The higher the deposit you are able to put down, the more mortgage options you’ll have.

Working on your credit score

Once your IVA has come to an end you can start looking to improve your credit score. Here are a few pointers that can help:

✓ Check your credit report regularly. Sometimes mistakes are made so it’s worth checking for errors that may impact your credit score. 

✓ Register to vote.

✓ Report rental payments to a free scheme to show a record of regular payments.

✓ Use Experian Boost to unlock information on your salary and council tax.

✓ Request for a ‘soft search’ when applying for credit.

✓ Only use around a third of your credit limit.

✓ Never miss repayments.

You may want to learn more about credit ratings and reports to help you understand why it’s important to build your credit history. 

I’m Ready to Apply for a Mortgage. What Now?

letter tiles spelling out mortgage

Now that you’ve discovered how you can improve your chances of being accepted by a lender, you may have decided that you’d like to apply for a mortgage. Read through the two steps below which should hopefully assist you:

1) Contact a Mortgage Specialist Broker

A specialist broker can add insight into which lenders will be more likely to accept you for a mortgage since there may be lending restrictions based on the fact that you’ve been in an IVA. A specialist broker will also advise you on what rates to expect.

2) Be realistic with your budget

If you’ve had an IVA, you’ll be used to evaluating your income and expenditure and living within a budget. When assessing your eligibility for a mortgage, the lender or broker will be following the same process; however, they are checking on your ability to make a sustainable mortgage payment. Be honest, clear and transparent during this process so that you don’t overcommit to a payment that you will struggle to make further down the line.

By following the above two steps, and by actively saving and working on your credit score, you should be able to put yourself in a good position to successfully apply for a mortgage.

If you’d like to know more about what’s entailed in an IVA, then please contact us, and we’d be happy to help.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

empty wallet from effects of debt

4 Alternative Solutions If Your IVA is Rejected

Written by Alex Swindells on . Posted in Bankruptcy, Debt help, IVA.

An Individual Voluntary Arrangement, commonly known as an IVA, is a legally binding agreement between you and your creditors that helps you pay off your debt in an affordable way. 

An Insolvency Practitioner (IP) will assess your income and expenditure to determine how much you can afford to pay. Your IP will then put a repayment plan forward to your creditors, detailing why you’ll be paying the amount suggested. It is at this point that your IVA can be rejected by your creditors. 

If your IVA is rejected, this does not stop your IP putting forward another repayment plan to your creditors. However, if your IVA is rejected again, or if you have come to the conclusion that an IVA debt solution isn’t right for you, then it should be a comfort to know that there are other options available which could help you in your financial situation. 

We have put together some of the pros and cons of debt consolidation, bankruptcy, a debt management plan, and a debt relief order, to hopefully help you decide on the best option for you.

1) Debt Consolidation Loan

Debt consolidation is a term used when you have several debts which you decide to combine into one loan. This can be done by taking out a new loan in order to pay off your original loans. There are a few pros and cons to debt consolidation. We have listed some of these below.

Pros:

  • All of your debts will be in one place.
  • Once the original loans are paid off in full, you will no longer be threatened with legal action by the initial creditors. 
  • The debt of your new loan can be repaid through monthly installments. As It’s only one loan that you’re repaying, the interest rates can be much lower, making it more affordable.

Cons:

  • If you have poor credit, then it’s unlikely that you’ll be approved for a new and bigger loan. 
  • If you are approved, then the interest rate could still be high, although you’ll only be paying for one loan.
  • There may be extra costs involved so it is important that you seek impartial advice.

 

2) Debt Management Plan

A debt management plan is an informal arrangement between you and your creditors where you use a third-party company to set up the plan and distribute money to them. As with debt consolidation, there are a few pros and cons to a debt management plan and we have listed some of these below.

Pros:

  • It can be relatively easy to arrange.
  • You can make one regular monthly payment. 
  • You pay back your debt in full, but at an affordable rate for you through reduced monthly payments.

Cons:

  • Your debts must be paid in full.
  • If your creditors decide they are no longer happy with the informal arrangement that you agreed upon, then they could still take legal action against you.
  • It could take longer for you to be debt-free than other formal debt solutions.

3) Bankruptcy Pros and Cons

Bankruptcy is a legal status which allows you to obtain a clean slate. If you owe less than £30,000, then you might be able to get a debt relief order (see more on this below). But in terms of bankruptcy, there are a few pros and cons to consider. We have listed some of these below.

Pros:

  • Most types of debt can be written off if you cannot pay them.
  • Once declared bankrupt, creditors can no longer take legal action against you. 
  • In most cases you will be discharged from Bankruptcy after 12 months.

Cons:

  • Some of your assets may be taken from you and divided equally to pay off your creditors.
  • Your bankruptcy is publicly available information. Details will be published in the London Gazette and on the Insolvency Register.
  • If you have a business, this can be taken from you or sold.

4) Debt Relief Order Pros and Cons

A Debt Relief Order (DRO) is an alternative to bankruptcy if you have limited assets and affordability. There are a few pros and cons to a DRO and we have listed some of these below.

Pros:

  • Any future interest and charges will be frozen on any debt you owe. 
  • Your creditors will no longer be able to take legal action against you.
  • Your DRO will only last twelve months after which any debts will be written off.

Cons:

  • To be considered for a DRO, you must meet certain criteria, such as your debts must not exceed £30,000 and you must reside in England, Wales or Northern Ireland. Also, your surplus income must not exceed £90 per month.
  • Homeowners are not allowed to apply for a DRO.
  • Your DRO will go public, appearing on the public register.


Now that we have detailed some of the pros and cons to various debt solutions, you may find it easier to decide which option will suit you best. However, if you are still in need of IVA debt help, then contact us today.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Finish line

5 Helpful Things To Consider When Your IVA Ends

Written by Alex Swindells on . Posted in Debt help, IVA.

When you enter into an Individual Voluntary Arrangement (IVA), you must make monthly payments towards your debts for the agreed term. But what happens once you have made your last payment? Your Insolvency Practitioner will confirm that you have made all of your payments and you will be issued with an IVA completion certificate. You are now debt free and you can move forward with a clean slate. However, an IVA has an impact on your credit score and your financial future, so there are certain things you should consider doing after making your final payment. Here are 5 helpful things to consider when your IVA ends.

1. Keep budgeting

a person working out their monthly bills

It is likely that the reason you entered into an IVA in the first place is because you were unable to manage your debts. Now that you are debt-free, it is important that you avoid getting into the same situation again. You will have been used to managing your finances within a budget whilst on your IVA; maintaining this once your IVA ends will help you manage your money well and improve your finances.

The additional money that was being paid into your IVA can now be put aside for savings and emergencies. By building a savings pot, you protect yourself against financial emergencies and avoid situations where you are forced to borrow the money you cannot afford to repay.

2. Open a high-interest savings account or ISA

saving money after an IVA

Now that you are more financially stable, you should consider putting money away for the future. Opening a high-interest savings account or an ISA is the best way to do this.

The main benefit of an ISA is that you won’t pay tax on the interest that you earn. However, there are limits on how much you can save each year and you may not be able to access the money right away (depending upon the ISA you take). A savings account, on the other hand, can give you more flexibility. Make sure you choose the type of account that suits your needs.

3. Consider further credit

Once you have completed your IVA, the debts that were included will have been settled. You may be wary about taking any further credit as you don’t want to get into a bad debt situation again. However, if you want to improve your credit score, using credit responsibly is a great way to do it. 

Using a credit card regularly, and in the right way, is one of the most effective ways to build credit again. There are a lot of credit cards available. You may not be able to access credit cards with the lowest rates, however as long as you use the credit sparingly, for small purchases, and make the repayments when they are due then the interest you will pay will be minimal. Creditors will then be able to see that you can maintain payments regularly, and this will help to boost your credit score. 

4. Monitor your credit report

Keeping a close eye on your credit report is beneficial to ensure that it is accurate, to keep you aware of your total credit and monitor for improvements. The 3 main agencies that generate credit reports are:

You can access your credit report by contacting these companies directly. Sometimes you are required to sign up for a paid monthly subscription to access your full credit report, however, there are many companies out there that allow you to access a summary of your credit information for free – search online for ‘free credit reporting’ to find one that suits you. 

Once the IVA is completed, your details will be removed from the Individual Insolvency Register after three months. Details of the IVA will be held on your credit file for six years from the date that the IVA starts. If you receive your credit report and your IVA has not been removed yet, you need to contact the credit agency to rectify it. Sometimes, details are not updated properly and the IVA remains on your report when it shouldn’t. If you send them your IVA completion certificate, they will fix the problem for you.

Check the reports for other errors and discrepancies too. For example, debts can be left on your report even though they have been paid off during the IVA. If there is anything that doesn’t look right, query it with the credit reporting agency and get it corrected. Mistakes like this are more common than you think and they can negatively impact your credit report, so always check your credit reports carefully.

5. Register to vote

person placing vote in ballot box

If you are not already registered to vote, you should do it right away because it instantly boosts your credit score. When you register to vote, details like your name and address are recorded on your credit report. Having these updated details makes it easier for the credit reporting agency to identify you and your score will increase as a result.

While this won’t fix your credit score overnight, it is a quick and easy way to boost it a little before you start using long-term strategies to improve your credit. You can register to vote online here and it only takes five minutes.

Need more IVA advice? Contact us today

If you have more questions about what to do at the end of your IVA, or you are struggling with debt and wondering whether it could be the right solution for you, we can offer the IVA help you need. At Swift Debt Help, we have a wealth of experience helping people manage their debt problems and unlock their financial future. Get in touch today and a member of our knowledgeable team will answer any questions you have.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Piggy bank

How to Improve Your Credit Score After an IVA

Written by Alex Swindells on . Posted in Debt help, IVA.

An Individual Voluntary Arrangement (IVA) will be on your credit reports for six years after the date that it starts.

Once the IVA has been removed from your credit report you can start rebuilding your credit score. Here is how to improve your credit score after an IVA.

Before you can start rebuilding your finances, you must ensure that you have successfully completed your IVA. When you first enter the IVA, your Insolvency Practitioner will inform you of how many monthly payments you must make. Towards the end of your IVA you may also be asked to remortgage your home and use the money to pay off some of your debts.

When you come to the end of your IVA, your Insolvency Practitioner will check that all payments have been made on time. If there are any missed payments, the IVA may be extended. But if everything is up to date, you just need to make your final payment.

When your IVA is completed, it should be automatically removed from your credit reports and you will also be removed from the insolvency register. Bear in mind that it can take a few months for records to be updated. Check your credit score after a month or two to make sure that the IVA has been marked as completed. If it has not, get in touch with the credit agency and send them a copy of the IVA completion certificate and they will rectify the mistake.

The first step to rebuilding your credit profile is to make sure that all bill payments are made on time and your credit score should slowly start to improve. When possible, you may want to consider borrowing small amounts of unsecured debt, as long as you can repay it on time. This serves as an indicator that you are a reliable borrower. After being on an IVA you will have grown used to living within a budget. It is recommended that any future debt repayments are manageable and the payment sustainable for you to avoid struggling with your finances.

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Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

IVA debt help

5 Scenarios Where An IVA Could Be The Best Solution

Written by Alex Swindells on . Posted in Debt help, IVA.

When deciding if an IVA is the right debt solution for you, it is important to consider your personal circumstances and priorities. Different debt solutions bring with them different qualifying criteria and obligations from you, should you enter into them. An IVA works by you making manageable payments towards your debts over a set period (typically 5 years), with any remaining included debt being written off upon completion of the arrangement. 

This guide will take you through some of the scenarios where an IVA could be the best solution.

1. You owe debts to multiple creditors

owing debt to multiple creditors

An IVA is typically suited for people that owe debts to multiple creditors. If you only owe money to a single creditor, you should contact them and ask about a more suitable repayment plan. A single debt is a lot easier to deal with and you can often come to some arrangement with your creditors without having to enter into a formal debt solution like an IVA. 

However, if you have multiple unsecured debts with different creditors, your situation is more complicated. Managing lots of different repayments is difficult and this is often how people lose control of their budget. An IVA will not only help you write off a portion of that debt, but it also allows you to make one single payment, which is then distributed amongst your creditors on your behalf. This makes it far easier to manage debts to multiple creditors.

2. You can afford monthly debt repayments

Before you enter into an IVA, your Insolvency Practitioner will assess your finances. Your income and essential expenditure will be reviewed to create a budget. This will then determine an affordable monthly repayment that you are able to make to all of your debts through the IVA. 

However, it’s important to consider your situation before you enter into an IVA. If you have a reliable source of income and you are confident that you can make the repayments on time each month, it is a good choice. An important factor when considering an IVA is that both you and the Insolvency Practitioner believe that the arrangement will be sustainable.

3. You owe more than £6,000 of unsecured debt

An IVA is designed for people that are unable to pay their unsecured debts within a reasonable timeframe (typically 6 years). If you owe a relatively small amount of money, you may be able to manage the situation with improved budgeting and informal agreements with your creditors. Fees are payable within an IVA, although these form part of your affordable monthly repayment. This means that creditors may not be inclined to agree to an IVA where your budget shows that you could potentially pay them back in full over a similar time period outside of an IVA where fees would not apply.

4. You work in the correct job

person dealing with finances for a job

In most cases, an IVA will not impact on your employment. However, there are some notable exceptions that you should be aware of. Certain jobs do not allow you to have an IVA. These are often jobs that involve handling money or being responsible for finances in some capacity. Examples can include jobs in:

  • Accountancy
  • Other financial services
  • Law

In some cases, jobs in other industries may not allow you to have an IVA. It is important to check your contract, or speak to your employer in whatever industry you are in before entering into an IVA if you are unsure. 

5. You don’t want to directly deal with your creditors

Many people find that one of the most stressful things about being in debt is the constant contact from creditors. If you owe money to a lot of people and you are getting a lot of phone calls and letters demanding payment, it can take a real toll on your life. Often people fail to deal with their debt properly because they don’t want to face all of their creditors and try to negotiate with them.

An IVA is ideal if you are in this situation because you do not have to deal directly with them. Your Insolvency Practitioner will help you draft an offer for your creditors and take it to them on your behalf. If there are any disputes about the offer, they will negotiate with creditors for you. All payments will be made to your Insolvency Practitioner too, and they will distribute them amongst your creditors. 

As soon as you enter into the IVA, you have legal protection and your creditors are no longer allowed to contact you for payment. Your Insolvency Practitioner becomes a liaison between you and your creditors. If dealing with creditors is becoming a major source of stress for you, an IVA could be the solution that you are looking for.

If you need some advice about whether an IVA is right for you, and what other debt solutions are available to you, get in touch with Swift Debt Help today and speak to a member of our expert team.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Man signing IVA paperwork

12 Debts That Can Be Included in an IVA

Written by Alex Swindells on . Posted in Debt help, IVA.

An IVA (Individual Voluntary Arrangement) is an effective debt solution for many people and it may allow you to write off a portion of your debts. Although there is no limit on the amount of debt that can be included, only certain types of debt can be included in an IVA – here are 12 that can.

1. Catalogues

ordering gifts from catalogue

Catalogues are used by many people as a convenient way of purchasing goods and spreading costs over a period of time. Catalogue debts tend to have high interest rates, so many people find themselves unable to pay. Your catalogue debts can be included in an IVA, however you should stop purchasing items in this way in order to manage your monthly budget going forward. 

2. Credit cards

If you’re struggling with credit card debt you may have previously managed this through transferring balances on to other cards and trying to keep your minimum repayment as low as possible. For many people there comes a point where credit card repayments, especially when coupled with other streams of lending, become unmanageable within their monthly budget. Credit card debts are another common unsecured debt that you can write off with an IVA.

3. Personal loans

For many people struggling with debt, an unsecured loan repayment can feel difficult to pay as it is one fixed monthly repayment, with little flexibility. It can often be larger than other debt repayments that you are faced with each month, particularly if you’ve used this to consolidate other debts from the past. Unsecured personal loans are included in an IVA. 

4. Overdrafts

Overdrafts are commonly used as a convenient way to access funds to meet monthly repayments on credit or bills. People struggling with their finances often find it difficult, or impossible, to get themselves out of their overdraft. In this situation people are often at risk of incurring additional penalty charges by accidentally going over their overdraft limit which only makes their problem worse. Overdrafts are included in an IVA. It is advisable to change banks to a provider to which you don’t owe money before entering into an IVA – any accounts to which you owe money will be frozen when you declare insolvency. 

5. Gas and electricity debt

hob with gas on

It’s quite common for people struggling with debts to build up arrears with their utility providers. These are unsecured debts, so they are also included in an IVA. This can include debts from a previous property as well as your current home. It is important to remember that you will be responsible for making payment to your ongoing usage after entering an IVA, the monthly repayments for your utility bills will be taken into account when carrying out your budget assessment.

6. Water arrears

tap with running water

The rules surrounding water arrears are the same as gas and electricity debt. You can include any existing debts in your IVA, and your ongoing monthly payments will be included in your monthly budget so you should find paying future payments manageable. 

7. Council tax arrears

Council tax arrears are considered a priority debt because penalties for not paying them can be severe. In rare cases, you could even be put in prison for refusing to pay. These debts can be included in an IVA and if you are unable to pay, it is important that you seek debt advice as soon as possible.

8. Payday loans

Payday loans should be utilised when you need emergency access to funds, and the balance will be repaid on your next payday. However, this is often not the case, and when this becomes a debt you need to pay on a monthly basis it can be very expensive as they have high interest rates. If you only make the minimum payments, the debt will continue to increase. As with other unsecured loans, payday loans can also be included in an IVA.

9. Store cards

A store card can seem like an attractive way of paying for your instore purchases, particularly where there are discounts being offered, or when you might not have the cash available at the time of purchase. Much like with catalogue debts, this type of borrowing can become difficult to manage if you have many balances spread across multiple creditors. The interest rates can often be high. 

10. Income tax and National Insurance arrears

Self-employed people struggling with debt often find it difficult to pay their end of year tax and National Insurance bills, alongside managing the repayment demands of their other creditors.

If you are self-employed (or have previously been self-employed) historic debts from HMRC, along with your expected debt for the current tax year will be included as a debt in your IVA along with other unsecured creditors. 

11. Tax credits

If you claim tax credits, there is a chance that you can be overpaid. This happens when there are mistakes with the information that the DWP holds about you or your financial circumstances change. Overpayments can be deducted from future tax credits or taken out of your paycheck.  These debts can usually be included in your IVA.

12. Guarantor Loans

If you have struggled to find mainstream credit, then a more accessible option is to take a guarantor loan; where you nominate a friend or family member to guarantee the loan repayments in the event that you are unable to meet them. As an unsecured debt, they are also included in an IVA however the Lender will be entitled to pursue the guarantor for any unpaid balance.

Need more IVA advice? Contact us today

At Swift Debt Help, we can give you guidance when applying for an IVA and answer any questions you may have about what debts can be included. We can also discuss alternative options with you. 

Fill out the contact form, send us an email, or give us a call and we can help you deal with your debt problem today.

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May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.