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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.

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.

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 key

4 Reasons to Consider a Remortgage to Clear Debt

Written by Alex Swindells on . Posted in Debt help.

Remortgaging your home can be an effective way to help deal with your debts. If you are unable to pay your debts, there are a number of options available to you including formal debt solutions, but you should consider remortgaging if you have enough equity in your home. 

By remortgaging your property you can release equity, which can then be used to clear your debts. These are some of the key benefits of remortgaging to clear debts.

1. You could save money by paying less interest

Man stacking coins on top of each other on table

Unsecured debts including credit cards, overdrafts, personal loans, and utility bill debts can all be cleared by remortgaging your home. The interest rates on unsecured debts tend to be higher than secured debts because they are not guaranteed by an asset, like your home. So, if you remortgage your home and use the money to pay off those debts, you could save a lot of money on interest.

2. You can remortgage for a better rate

Man collecting keys for a new house from woman with a small model of a house on the table

If you are unable to release cash by way of a remortgage, it may still be worth considering this as an option. Mortgage interest rates fluctuate a lot, so you may be able to get a better rate than you did when you first bought your home. This could allow you to make savings on your monthly mortgage payments, giving you more funds available each month to make your unsecured debt repayments.

However, you are not guaranteed to get a better rate because the deals you are offered are dependent on a number of factors. Lenders will consider your credit score, the value of the property, and how much you want to borrow. If you are in a difficult financial situation already, you may struggle to get a better rate when remortgaging.

3. You can borrow a larger amount if necessary

Loan agreement within a folder with calculator and pen on top

If you have large debts, you may be able to borrow a larger amount to clear them. The amount that you can borrow is calculated based on the loan-to-value (LTV) ratio. For example on a 90% LTV, this means that the total amount you can borrow against a house that is worth £100,000, is £90,000. If you have paid off a portion of your mortgage already, or your home has increased in value, you may be able to borrow a larger amount.

4. It’s an alternative to a formal insolvency solution

Formal insolvency solutions like bankruptcy or an IVA can help when you are unable to pay your debts. A portion of the debt can be written off and you will make regular payments to clear the rest. Remortgaging is an alternative to formal insolvency solutions and it does not have the same negative impact on your credit score.

If you have a lot of debts and you are unsure how to deal with them, Swift Debt Help can give you the support you need. Get in touch today and we can discuss whether remortgaging or other formal debt solutions are right for you.

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.

Creditor repayment

Can a Creditor Refuse a Payment Plan?

Written by Alex Swindells on . Posted in Debt help.

If you are unable to afford to make the full contractual repayments to your creditors, you can suggest a reduced payment plan. You offer to pay a reduced amount each month until the debts are cleared. If your creditors accept, this makes your debts a lot more manageable. But what happens if creditors do not accept your payment plan?

Speak To Your Creditors

creditors meeting together and looking through paperwork

If one or more of your creditors haven’t agreed to accept the monthly amount you have offered, this could be because they believe the offer is too low based on your circumstances. It is beneficial for them to understand your situation in full, so discuss this with them; they may carry out a full review of your income and expenditure. If you can prove to their satisfaction that this is the best offer of repayment that you can make, then they may be more inclined to accept your offer.

Are Creditors Obligated To Accept A Payment Plan?

Your creditors are under no legal obligation to accept a payment plan however they may be willing to engage with customers, and agree a plan, if they have a full understanding of their circumstances. For many individuals, requesting a reduced payment plan is a final step before having to seek alternative debt solutions such as a Debt Relief Order (DRO), Individual Voluntary Arrangement (IVA) or Bankruptcy. A creditor may be keen to accept the offer in order to avoid being subject to one of these procedures through which debt write off is likely to occur. Within a reduced payment plan, your creditors will still ultimately expect to be paid in full.

Even if you are not reasonably able to afford your payments, your creditors can still refuse the payment plan and take further action to collect the debt, like sending bailiffs, for example. By agreeing to a payment plan and accepting lower payments, it takes creditors longer to recoup their investment, so they may be reluctant to do so.

What if a creditor refuses my offer?

man giving a thumbs down

If your creditors will not agree to a payment plan, you need to look into other options for dealing with the debt. You could look at utilising a company or charity to negotiate a Debt Management Plan on your behalf. This is similar to what you have been trying to do yourself; however, the company will have experience in dealing with creditors and will take the stress of having to deal with multiple creditors away from you. If your creditors reject the offer of repayment, then further collections activity can continue including the application of fees and charges or legal action.

If you are unable to pay back the debt, you should consider options like an IVA (Individual Voluntary Arrangement), DRO (Debt Relief Order), and Bankruptcy. These are formal debt solutions that, in some cases, allow you to reduce the total amount of debt that you owe. They also give you legal protection against creditors so they cannot continue pursuing you for debt payments.

What should I do if a creditor sends me a default notice?

Being issued with a default notice doesn’t necessarily mean that you will be taken to court. It is a standard document that a creditor must send if you are not meeting your contractual repayments. Legal action is usually a last resort for creditors, so they may still be willing to work with you. 

Contact Swift Debt Help for expert advice

If you are having difficulty paying your debts and your creditors are unwilling to accept a payment plan, get in touch today for some expert advice. Our team can take you through alternative debt solution options and find one that works for you.

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.

Heating thermostat

How To Deal With Fuel Poverty

Written by Alex Swindells on . Posted in Debt help.

Ofgem, the UK’s energy regulator raised the fuel price cap to unprecedented levels in recent weeks. This cap determines the maximum amount that energy companies can charge for gas and electricity and now that it has been raised, households across the UK are expecting a significant increase in their energy bills in the coming months. 

As the government continues to look for ways to manage this crisis, experts are concerned about families being pushed into fuel poverty and facing mounting utility bills debt. This article will explain what fuel poverty is and how you can avoid it.

What is fuel poverty?

Electricity towers

Fuel poverty describes a situation when a household has above-average energy costs that are pushing them below the poverty line. When a household cannot purchase all of the energy that they need without their remaining disposable income being below the poverty line, this is considered fuel poverty. For a couple of working age, the poverty line is set at £244 per week after housing costs. So, if you are left with less than this once you have paid for energy, you are experiencing fuel poverty.

In recent years, there has been a sharp rise in fuel poverty in the UK. After the latest energy cap increase, it is estimated that 1 in 4 households (more than 15 million people) will be living in fuel poverty and may also have water arrears debt too. This figure will only increase as long as energy prices are still rising.

Why are energy prices rising?

gas cooker

The main reason for rising energy prices is a sharp rise in wholesale gas prices. This increase is passed on to the energy companies and, ultimately, the customer, which is why we are now seeing a big jump in energy prices. This problem is not limited to the UK, it is happening across Europe too. 

The rise in wholesale prices is caused by a number of factors. As we come out of the pandemic, businesses are reopening and more people are driving again, which is one reason why there is a much higher demand for fuel. This coincides with the onset of winter when demand is already much greater, meaning that we cannot produce as much gas as we need and the prices have spiked as a result.

How can I save on energy costs?

  • Switch to a cheaper energy supplier – Most introductory offers with energy companies give good prices. But when your policy renews and you are switched onto a default tariff, the prices can increase significantly. However, switching regularly allows you to take advantage of the best prices available. Tariffs are always changing so do not assume that your current provider is the cheapest option, even if they were when you first signed up. Energy comparison sites make it easy to find better deals and switch.
  • Install a smart meter in your home – Smart meters are now provided for free and they are an excellent way to monitor your energy use. By tracking how much gas and electricity you are using, you can make small changes to your lifestyle to bring your bills down. Your smart meter will also send automatic meter readings to your energy company so you get more accurate bills.
  • Switch to energy-saving lightbulbs – It is estimated that the average UK household would save £40 per year on their energy bills by switching traditional halogen light bulbs for LED ones. They also have a much longer lifespan, so you save on replacements in the future too.
  • Buy energy-efficient appliances and electronics – Large appliances and electronics are the biggest energy consumers in your home. Old appliances are likely to use a lot more energy than new, energy-efficient options. For example, an energy-efficient fridge freezer can save you up to £104 per year. All appliances come with an energy rating from A to G, with A being the most efficient. Check this before purchasing any appliances because, even though they are more expensive, an A-rated appliance will save a lot of money on bills.
  • Turn down your thermostat when possible – Small adjustments to your thermostat will save a lot of money on gas bills. Reducing the temperature by just one degree can save up to £128 per year, and you will not notice the difference.
  • Wash your clothes at a lower temperature – You can wash your clothes at a lower temperature to save money and they will still wash just as well. Setting the temperature to 30 degrees or lower will reduce energy consumption by roughly 60% compared with washing at 40 degrees.
  • Install double-glazed windows – Double-glazed windows provide excellent insulation to stop heat loss. This makes it much easier to keep the house warm without constantly running the heating. In a typical detached home, you can expect to save £110-£140 per year. The cost of installing double glazing ranges from £3000-£7000, on average. In 2020, the government launched the Green Homes Grant Scheme, which offers homeowners and landlords vouchers worth up to £10,000 to make energy-efficient upgrades to their homes, including double glazing.
  • Install roof insulation – The roof is the biggest source of heat loss in the home. By installing more insulation, you can trap heat in the home and reduce your energy bills. Insulation panels cost around £25 per square metre you want to cover, and you can save up to £225 per year in a detached house or £135 in a semi-detached property.
  • Research and apply discounts – There are a number of discounts and grants available to help people who are having difficulty with energy bills. The Warm Home Discount Scheme, for people on a low income or claiming Pension Credit, gives you a £140 discount on your electricity bill or a voucher for a prepayment meter.

The Winter Fuel Payment is an annual payment given to anybody born on or before 26th September 1955. The amount you are eligible for may vary.

Cold Weather Payments are given when the temperature drops below a certain level. You may be eligible for this benefit if you claim benefits like Universal Credit, Income Support, or Pension Credit. 

Researching these discounts and applying them can make your energy bills a lot more manageable.

Are you in debt from fuel poverty?

If you have already missed payments due to fuel poverty and you are struggling with utility bills debt, get in touch with Swift Debt Help today. We can advise you on debt management solutions, including an IVA or bankruptcy, to help you clear your debts. 

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.

Miniature house and keys

Can You Get a Mortgage with an IVA?

Written by Alex Swindells on . Posted in IVA.

Getting a mortgage with an IVA (Individual Voluntary Arrangement) is possible, but there are challenges to consider. If you enter into an IVA, it is likely that you already have high debt levels and poor credit. This will be taken into consideration when applying for loans. Restrictions on borrowing during the IVA will also cause potential problems. However, it is not impossible to get a mortgage.

This article contains important considerations you need to take into account when considering obtaining a mortgage whilst on an IVA.

Getting a Mortgage with an IVA

Person holding keys for house

During an IVA, your debts will effectively be consolidated into one single payment. You will then enter into a payment plan, which you must adhere to for the duration of the IVA. There are also financial restrictions you must follow during the IVA, especially where borrowing is concerned.

If you want to borrow more than £500, you need written permission from your Insolvency Practitioner. So, even though you can technically get a mortgage, you need to seek their approval first.

It is important to discuss this with your Insolvency Practitioner beforehand and explain your reasoning for getting an IVA mortgage to them so they can advise you.

Will I need a specialist mortgage lender?

If you do decide to apply for a mortgage during your IVA, you will most likely need to work with specialist mortgage lenders. These lenders typically offer a wider range of products and can work with people who are in an IVA or previously have been. However, they will come at an extra cost in terms of fees and interest rates, and you will need a larger deposit.

Standard lenders will not consider your application, in most cases, so you will be limited in terms of loan options and you will need to work with more specialist lenders.

How does an IVA affect a mortgage application?

empty application form

An IVA can have a profound effect on the mortgage application process. Bear in mind that your main responsibility is paying into your IVA and clearing your debts. The restrictions exist to ensure that all available money goes towards the IVA. If you do obtain a mortgage, you may first need to agree to attempt to release equity from it towards the end of the IVA

There are also several factors that will affect the application process and dictate how much you can borrow and what interest and fees you will pay. Consider the following:

Disposable income

Lenders will consider your disposable income when deciding whether you can afford a mortgage or not. However, the majority of your disposable income must go towards your IVA. This will affect how much you are able to borrow. If you are currently paying rent, then the amount you are paying for rent each month is likely to be the best indicator of what will be affordable to you in terms of a mortgage repayment.

Credit report

An IVA is listed on your credit report and it can have a severe negative impact on your credit score. Lenders will do a credit check to determine your risk as a borrower. Having an IVA on your report will work against you and some lenders are far more likely to reject your application altogether.

Unaffordable rates

The likelihood of your mortgage application being rejected is much higher when you have an IVA. However, even if you are accepted, it is likely to be a comparatively expensive mortgage with high interest rates because of your poor credit score. Currently, the majority of your excess income is going towards your IVA. Paying an expensive mortgage puts more pressure on you and makes it much harder for you to manage your finances. In many cases, you will find that you are unable to afford a mortgage even if you do qualify for one from a specialist lender.

How to get a mortgage with an IVA

Row of little red houses

You may decide that getting a mortgage is the right option and you are able to afford it. In that case, the first thing you need to do is get permission from your Insolvency Practitioner. If you apply for credit over £500 without permission, you breach the terms of your IVA you put yourself at risk of the IVA failing, leaving you to deal with the demands of your unsecured creditors directly once again.

When you ask for permission, your Insolvency Practitioner will consider:

  • If the mortgage is necessary
  • How long it will take you to repay
  • Whether you can comfortably pay it alongside your IVA payments

Bear in mind that they can deny your request if they don’t feel that it is the right decision. They will be particularly mindful of whether it is to the benefit or detriment of the IVA creditors to allow you to obtain the mortgage.

If they do approve in principle, you need to start comparing deals. Make sure you weigh up a lot of options to find the best interest rates and deposit amounts. Tread carefully where specialist lenders are concerned.

When you think you have found the right deal, the insolvency practitioner will need to know the amount of the monthly mortgage repayment, in order to satisfy themselves that it is acceptable, before confirming their permission.

Applying for a mortgage after an IVA

Getting a mortgage after an IVA could be a far better option than applying while you are still subject to the arrangement.

Once you have finished making the payments and you are released, you are no longer bound by restrictions, so you can borrow normally without needing permission. You also have full control over your disposable income and no debts to pay, so you are likely to be able to demonstrate a higher disposable income and affordability, which should broaden your borrowing options.

However, the IVA still remains on your credit report for six years and it has a negative impact. Lenders may give less relevance to the IVA as time goes on. So, if you wait a few years, you stand a much better chance of getting a favourable interest rate than you would if you applied immediately after your IVA.

Giving yourself some time also allows you to build your credit rating and save a larger down payment, so when you do eventually apply, you can get a more affordable mortgage. Keep in mind that a rejected application will damage your credit score, so your likelihood of acceptance should be considered carefully before making an application.

Find Out Whether You Could Be Better Off With An IVA.

Am I Eligible For an IVA?

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

Twenty Pound Notes IVA

What Are The Implications Of An IVA?

Written by Alex Swindells on . Posted in IVA.

An Individual Voluntary Arrangement (IVA) is a formal debt solution that typically allows you to make repayments that you can afford, over a set period, with any outstanding debt written off at the end of the agreement. 

However, every case is unique and before making any decisions, it is important to consider the wider implications of an IVA and whether other options like bankruptcy may be a better alternative. There are a number of ways that an IVA will impact your life and your financial situation.

How will an IVA impact your job?

Man walking to work with briefcase in hand

Usually, an IVA will not impact your job, but there are important exceptions. If you work in a position of financial responsibility (bank clerk, accountant, solicitor, etc) it is expected that you uphold a certain level of personal financial stability. So, in this case, an IVA may affect your job and you may not be able to continue in that position until it has finished. Some other positions of responsibility, like working for the police and prison service or the fire brigade, may be affected. If you own a business, you can continue operating. However, it will be harder to find credit. 

Before entering into an IVA, speak to your employer and review your employment contracts to determine whether you are affected or not.

Does an IVA impact your future income?

Calculating income on smart phone

This is dependent on your career plans. If you want to enter one of the careers listed above, it could be a problem. Otherwise, it should not impact your future income. 

However, if you are planning to sell assets during your IVA, you may have to put some or all of the income from the sale into debt payments.

How will an IVA affect your possessions and assets?

Five pound note rolled up

When you enter into an IVA, you must declare all of your assets to your Insolvency Practitioner who will work with you to draft your offer of repayment to creditors (your ‘Proposal’). All of your significant assets will be listed within the proposal as creditors need to see an accurate reflection of your financial circumstances in order to make a decision as to whether your offer seems reasonable and fair to them. There is no legal requirement for you to sell or surrender any particular assets of value as part of your offer, however, generally speaking, creditors are unlikely to agree to write off debt for you if they believe your assets are of excessive worth which could be sold to help repay the debt.

If you are a homeowner, and have equity available in your property, it will be expected that your proposal will include your agreement to attempt to release a portion of this towards the end of your IVA. The inclusion of home equity, as well as any other significant assets, will be discussed and agreed with you during the process of putting your IVA proposal together.  

Can you get a mortgage with an IVA?

Man holding house

Getting a mortgage during your IVA can be difficult. You must seek approval from your Insolvency Practitioner if you want to borrow more than £500. 

An IVA (as with any form of insolvency) is recorded on your credit file for 6 years from the date it is approved, and is publicly available information as it is disclosed on the Insolvency Register. A mortgage lender or broker will assess your application against lending criteria. The fact that you have been declared Insolvent could affect whether a mortgage is available to you, or the rate that will be offered.

How long does an IVA stay on a credit file?

An IVA stays on your credit report for 6 years from the date of approval. 

Does an IVA affect financial mis-selling compensation?

In many cases, as part of your proposal to creditors, the Insolvency Practitioner will agree to pursue potential claims on your behalf. Any money that you are awarded is considered an asset of the IVA and it will help repay the creditors in the IVA.

What other restrictions does an IVA have?

An IVA has other restrictions that you should be aware of when making your decision: 

  • Missed payments – you must maintain payments towards your IVA. If you miss the equivalent of 3 monthly payments without any agreed payment breaks being sanctioned by the Insolvency Practitioner, then you will be in breach of the terms of the arrangement. If this is not remedied, your IVA may fail. Any payments that are agreed to be missed, still need to be paid at the end of the arrangement meaning that it could last longer than initially proposed.
  • Taking out additional credit – You are unable to take out any additional credit, of more than £500 without the prior consent of the Insolvency Practitioner. This includes use of catalogues and overdrafts .
  • Budget restrictions – When proposing your IVA, you are required to put all of your surplus income towards debt payments, and live within a budget. During the lifetime of the IVA if your financial situation improves, you are required to disclose this to the Insolvency Practitioner and your payments may increase.

Is An IVA Worth It?

There are a lot of IVA advantages to consider. You can write off a significant portion of your debt, in some cases, and you will avoid high-interest payments. Ultimately, it allows you to clear your debts and secure your financial situation. 

On the other hand, you must consider the IVA disadvantages when weighing up your options. It does impact your life and finances in a number of ways and you should think carefully about whether you are willing to deal with the implications. 

In the end, it all comes down to your own personal financial situation. At Swift Debt Help, we can advise you on whether an IVA is the right option for you and take you through the alternatives if it is not. Fill in our form below to find out if you are eligible for an IVA.

Find Out Whether You Could Be Better Off With An IVA.

Am I Eligible For an IVA?

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