Preparing Your IVA Application
Before committing to any debt solution, it’s important to get as much information and advice as possible. This will help you to draw comparisons between the different options open to you.
It generally takes about 4 weeks to set up a typical, non-complex IVA. However, this very much depends on how quickly the applicant returns fully completed documentation.
After you’ve spoken to an advisor and decided that an IVA is the best choice for you; your case will be passed on to an IVA drafter who’ll assist you in preparing your IVA proposal.
The proposal is the formal offer you are putting forward to your creditors. To do this, we need to gather as much information about you as we can to help us put together a detailed IVA proposal on your behalf to give your creditors a full picture of your circumstances.
The Information we need from you
There are several documents that will be requested from you in order that we can begin drafting your IVA Proposal.
Typically we will ask you to provide:
- Photo ID
- Rent agreement
- Mortgage statement/secured loan statement (if the home is owned)
- 3 months wage slips
- 3 months of recent bank statements
- Proof of council tax and utility bills.
- HP agreement (if required)
- Recent creditor statements with up to date references.
The above list may be altered dependent on circumstances. Further information may be required.
We will also ask you to confirm your income and expenditure. We work to guidelines that the majority of creditors agree to for allowances for food, toiletries, pay TV etc. It may be that we need to justify certain expenditure further. E.g. petrol: we have to detail mileage is driven when petrol allowances are unusually high.
Drafting Your IVA proposal
Once we have all information required, your file will be passed to the drafting team where you are allocated a personal drafter. The drafter will draft a legal document called an IVA Proposal.
The drafter will look through the documents you have provided to ensure all information is correct and evidence is on file should your creditors request any additional information.
He or she will arrange a time to speak with you for a consultation call. This call will last on average between 10 and 30 minutes. It is part of the drafter’s role to ensure that your case has the best chance of being accepted by your creditors in the quickest time possible.
Many of the questions will be asked will be in respect of your income and expenditure. We will ask for details of any expenses that are over government guidelines to ensure that creditors are satisfied that all spending is justified. For example, if you spend £300 per month on petrol we need to tell the creditors where you drive to and from per month. We will also make sure no creditors have been missed off the arrangement in error. Should any creditor not be disclosed it may lead to IVA rejection.
The drafter will then explain in further detail the IVA meeting process and request any further information that may help the creditors reach a favourable decision at your meeting of creditors.
It is imperative that you feel that you have made an informed decision and therefore the drafter will briefly review all of your financial solutions before finalising the proposal document.
Frequent Questions at IVA drafting stage
I am doing an IVA, but my partner isn’t. Why do you need their details?
We need to be able to show the creditors that your contributions to the household are fair. For example, if you earn £1,000 per month and your partner earns £2,000, it is fair that you pay half as much as they do towards the household. Creditors may reject your IVA if it seems that you cannot pay your debts because you are paying more to the household than is fair.
Will my partner’s credit rating be affected by my IVA?
If you are not financially linked through any unsecured or secured creditors with your partner then the IVA will not affect your partner.
Why do I have to change my bank account?
If you owe money to a bank for a loan or credit card and you also bank with that creditor they may have ‘right of offset’ which means they can take money from your bank account without permission. The bank may also withdraw their bank account once they are notified about the IVA. It is the best advice that you open a bank account with a bank or building society prior dealings. This bank account will need to be in place before the proposal is sent to creditors
What will happen in the IVA if I win the lottery?
If you receive any windfall above £500 it will have to pay into the IVA fund for the benefit of creditors up until the debt is paid in full plus any statutory interest which may be due. A windfall can include lottery payments and inheritance
If I lose my Job will my IVA fail?
It is possible to take a payment break for circumstances such as redundancy or sickness. This means that you may be allowed up to 6 months without or on reduced payment while you find a job or apply for any benefits due. The Supervisor of the IVA will request evidence, and you will have to receive permission from the Insolvency Practitioner to take such a break. This will extend the term of the IVA for the length of the break months. Should it take longer than six months to find work, then an IVA variation may be required.
I’m expecting a pay rise. How will this affect my IVA?
We may ask for an increase in the level of contribution if there has been a significant change in your circumstances such a considerable pay rise. We will send a new income and expenditure form for you to complete. In the majority of cases, payments will remain the same, and we will only ask for an increase in contributions when there is an apparent increase in your ability to pay.
How long after the IVA is finished can I apply for credit?
Following the completion of the IVA, you are free to use credit; however, the IVA will show on your credit file for up to 12 months after the end of the IVA so it may not be possible to obtain credit, depending on the lender’s criteria.
I am part of a workplace pension scheme. Am I still allowed to contribute?
As long as you are not paying above the minimum contributions required as part of the pension scheme creditors are usually accepting of pension contributions.
What if I must miss a payment due to an unplanned expenditure?
It may be possible to take a payment break in such circumstances. If an essential appliance such as a washing machine breaks or you receive an unexpected car repair bill. Should you be successful in your application for a payment break the term of the IVA may be extended to make up for the missed payments.
Can I keep my car with an IVA?
It depends on the vehicle and your circumstances. This is the case for all high-value assets. It is normal to be allowed to keep a car worth a reasonable amount, especially if needed for work or family commitments. The conditions are not as strict as with bankruptcy.
As a general rule of thumb, your creditors will not be interested in a car worth less than £9,000.
For cars on hire purchase, this debt is secured and therefore can’t be included in the IVA, the HP company will simply repossess the vehicle if you do not maintain payments. Usually, you will be allowed to keep making HP repayments while on the IVA. However, once payments are completed, you will be expected to produce increased amount into the IVA now that your outgoings are lowered. It may be the case that you decide to cut your losses and return the car to the finance company. In this case, the outstanding balance is no longer secured and can be included in an IVA proposal.
For PCP and leasing, you don’t own the car. The credit involved in these contracts is not included in your IVA, and if you want to keep the vehicle, you have to carry on making the monthly repayments. Your creditors will want you to be able to get to work. But if your monthly car finance costs are very high, you may be required to look at cheaper options.
Can I still keep my business?
In most cases yes – however this can be complex and is case dependant, so we will not go into detail here – please contact us for advice.