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For us to determine what solution is the best option for you, we will need to assess your current circumstances, including your income and expenses. To make the assessment as straightforward as possible, we recommend getting together details of your income (i.e. any benefits you receive, a monthly/weekly salary), details of what you owe to which companies, and your regular expenses. For your expenses, you can use your bank statements for the last three months to calculate what you’re paying for items like:
– utility bills
– rent/mortgage
– travel costs
– food and toiletries
– childcare
If you’re unable to gather this information before we speak to you and you’re unsure of anything, don’t worry, our friendly team of experts will be happy to help.
If you know who you owe money to, you can contact your creditors for up-to-date debt balances. However, if you are unsure who you owe money to, don’t worry, with your permission we can conduct a credit search on you to get the full details and exact balances.
An IVA, also known as Individual Voluntary Arrangements, are the English, Welsh and Northern Irish equivalent of Trust Deeds in Scotland but an IVA is not exactly the same as a Trust Deed.
The length of the process is the main difference, with a Trust Deed typically lasting 4 years and an IVA lasting 5 years. Sometimes you may read about a Scottish IVA, but this is a term generally used to describe a Trust Deed.
Another difference is the amount of debt that can be included with a Trust Deed, you would typically have £6,000 of unsecured debt, and with an IVA, you can apply for an IVA with £5,000 of unsecured debt.
An individual voluntary arrangement (IVA) is a formal agreement between you and your creditors. It is a fixed-term debt plan that legally protects you from your creditors. An IVA freezes interest and cuts your monthly repayments to an affordable level. Better yet, any debt left unpaid when the term finishes is written off. The exact amount of your monthly payment will depend on your circumstances but can start from as low as £70. If you are a homeowner, once your IVA is approved your home is protected. Typically, an IVA will last for 5 years and allows you to make an affordable monthly payment from your income. Once your IVA has been fully approved, you don’t need to worry any more about your creditors contacting you. Your insolvency provider who supervises your IVA will deal with all your creditors. Once the final IVA payment is made, you will no longer be liable for any of the debts included in your IVA and there will be no further balance to pay, even if this means your debts have not been repaid in full.
An individual voluntary arrangement (IVA) is a type of insolvency and a legally binding arrangement between you and your creditors. It may be a suitable solution if you can afford to pay something to your debts, but not the full amount your creditors want.
If you have a lump sum to pay towards your debts, you may also be able to qualify for an IVA.
An IVA should be carefully considered because of the possible consequences for your personal, professional, and financial life. There are several risks that you must consider before applying which is why you should get expert debt advice.
Contact our team of debts experts today.
The typical time taken to set up an IVA is between 21 and 28 days. You will need to provide information to your insolvency provider. Your insolvency provider will also obtain information online to confirm values of items like your house or car. As you are making an important financial decision it is essential to make sure that you take the time you need to read and understand your IVA proposal and make sure this is the right decision for you.
At My Debt Plan, we will take time to explain the options available to you and our team will be happy to answer any questions or concerns you may have before you make the decision to proceed with your IVA. Once you have read and approved the IVA proposal you are going to make to your creditors it is necessary to send the proposal to your creditors and allow your creditors at least 14 days to consider and vote on your proposal.
Your IVA will be registered and will show on your credit file for six years from the date it is approved and for up to 12 months after your IVA has concluded. During this time, you’re likely to find it difficult to obtain credit. You must also inform your insolvency supervisor and get written permission if you want to take out more than £500 worth of credit during your IVA. Details of individual voluntary arrangements are listed on a public register called the Individual Insolvency Register. It’s unlikely that anyone would come across this information, but it’s something which is available to those who know where to look for it.
The effect of your IVA on your credit rating will also depend to some extent on what your credit rating was like before you commenced your IVA.
This greatly depends on who you work for and your role. When entering an IVA, some jobs could be affected, for example:
The best way to find out if an IVA would impact on your job is to check with your employment contract, professional membership body, trade union, or ask to speak confidentially to your HR department. It’s extremely important to check if your job will be affected, but in our experience most jobs are not.
As long as you don’t owe money to the company that you bank with then the answer is yes. However, if your bank is also one of your creditors, it is likely they would freeze your account once they know that you are proposing an IVA, so we would advise you to change your bank in those circumstances.
IVA costs are charged for the preparation of your proposal and the administration of the arrangement for the full term (usually 5 years) these costs are charged from the monthly contributions you make into the IVA and are not in addition. Costs will only be recovered on approval of your arrangement and once you commence making payments to it.
The fees for preparation of the proposal to creditors and calling the meeting for creditors to vote on its approval are called nominees fees, the fees for running the arrangement once approved are called supervisors fees. There are also some expenses incurred in the running of the arrangement such as the registration fee and the statutory insurance that needs to be taken by law, these are called disbursements. For our arrangements, the total of all of these is £3,650 although this may be adjusted by creditors when they vote on whether to accept. No matter what the end total of costs come to, you can be rest assured that these will be taken from the monthly payment we agree with you.
You can view the Guide to Insolvency Practitioners Fees here
You are free to change jobs at any time during your IVA. If your income increases when you change your job you may need to inform your IVA provider as this may affect the amount of your income contributions payable into your IVA. Your creditors will expect you to agree to increase your contributions by up to 50% of the increase in your net income but they will also allow you to deduct from this increased payment any additional living expenses or expenses associated with your new employment such as additional travel costs.
During your IVA there is no reason why you should not be able to change your car. Your creditors understand that for many people it is important for them to have the use of a reliable car so that they can commute to work and continue to earn the income from which the IVA contributions are going to be paid.
One limitation to consider when changing your car is the amount of new finance you are allowed to obtain for the purposes of acquiring a new car. Before you obtain additional credit you are expected to obtain the consent of your IVA provider as they will want to make sure the additional credit you are taking on is affordable for you.
As a mortgage is a form of credit you will be expected to obtain the consent of your IVA provider to a new mortgage. More notably, you are likely to find that there are only a few mortgage lenders that are willing to agree to provide you with a mortgage before your IVA is settled. If you find a mortgage lender who is happy to provide you with a mortgage, then your IVA provider is likely to agree to the mortgage proceeding provided that your income and expenditure budget still allows you sufficient money to be able to continue paying your agreed IVA contributions.
Your IVA proposal will allow you to take payment breaks if your circumstances change unexpectedly and you need to miss one or more payments into your IVA. If you take a payment break, the missed payments will be added to the end of your IVA payments which will mean that your IVA will last longer than 60 months. If your circumstances change permanently and you are only able to afford to pay reduced income contributions your creditors will be invited to agree to vary the terms of your IVA to allow you to pay reduced contributions. In most cases, you will find that your creditors will agree to a variation of your IVA when the changes to your circumstances are explained to them.
If you find there has been a change in your circumstances this may mean it is in everyone’s interests to look at varying the terms of your IVA so that your IVA finishes earlier than was originally expected. If a friend or relative, is aware of your financial troubles and has offered to provide financial help to clear your debts then you maybe in a position to offer a single lump sum payment to be paid into your IVA in place of continuing to pay income contributions for the remainder of the 60 months originally agreed. Your creditors may favour this because they will receive payment earlier than if they had to wait for the full 60 months term of your IVA to receive all their payments.
My Debt Plan experts will be happy to discuss with you any proposals you may wish to make to vary your IVA so that it concludes early.
When your IVA finishes you will receive a report from your IVA provider confirming your IVA has been successfully concluded. Your IVA provider will update the Insolvency Register which has a record of your IVA so that it shows your IVA has been successfully concluded. Your creditors will also receive the final report from your IVA provider. The report will explain how much has been repaid to your creditors after the costs of your IVA have been paid.
A Trust Deed is a valuable debt relief tool that offers a way to manage unaffordable debt for Scottish residents. It may be a suitable solution if you can afford to pay something to your debts, but not the full amount your creditors want.
Depending on your personal circumstances you could look to reduce your monthly payments down to an affordable level.
You should never feel pushed into taking a Trust Deed and it should be carefully considered because of the possible consequences for your personal, professional, and financial life. There are several risks that you must consider before applying which is why you should get expert debt advice.
Contact our team of debts experts today.
Typically, a Trust Deed will last for 4 years. You will make one fixed regular affordable monthly payment to your Trustee, who distributes the money to your creditors, minus their fee for arranging and managing the Trust Deed. However, in some circumstances, it may take you longer to complete the Trust Deed e.g., the duration of the Trust Deed term may be extended for a period of 12 months, meaning that the Trust Deed duration would then be 5 years. This would be discussed with you in more detail when you speak to our experienced debt advice team.
There are no upfront fees to setup your Trust Deed but there are costs involved in running a Trust Deed. At the moment all Insolvency providers charge fees and there’s no free service, however, Insolvency provider fees are included in the monthly amount that you agree to pay back. These fees are agreed by your creditors and theoretically absorbed by the creditors as they are writing off a proportion of your debt. The purpose of the Trust Deed is to allow you an opportunity to get out of debt and reduce the amount you pay each month towards debt payments.
Your Trust Deed will be registered and will show on your credit file for six years from the date it begins and for up to 12 months after it has concluded. During this time, you’re likely to find it difficult to obtain credit. You must also inform your insolvency supervisor and get written permission if you want to take out more than £500 worth of credit during your Trust Deed. Details of a Trust Deed are also listed on a public register called the Individual Insolvency Register. It’s unlikely that anyone would come across this information, but it’s something which is available to those who know where to look for it.
This greatly depends on who you work for and your role. When entering a Trust Deed, some jobs could be affected, for example:
The best way to find out if a Trust Deed would impact on your job is to check with your employment contract, professional membership body, trade union, or ask to speak confidentially to your HR department. It’s extremely important to check if your job will be affected, but in our experience most jobs are not.
Since a mortgage is a form of credit you will be expected to obtain the consent from your Trust Deed provider. More notably, you are likely to find that there are only a few mortgage lenders that are willing to agree to provide you with a mortgage before your Trust Deed is settled. If you find a mortgage lender who is happy to provide you with a mortgage, then your Trust Deed provider is likely to agree to the mortgage proceeding provided that your income and expenditure budget still allows you sufficient money to be able to continue paying your agreed Trust Deed contributions.
Lucy Novo Deakin is a licensed insolvency practitioner in the UK by the Insolvency Practitioners Association (IPA).
My Debt Plan Ltd provides insolvency solutions to individuals, specialising in IVA’s. All advice given is provided in reasonable contemplation of an insolvency appointment. Where you are not suitable for an IVA, we may refer you to one of our trusted partners who specialise on alternative solutions, and as such we will receive payment for the introduction if you enter into a debt solution with one of our partner companies.
Registered address 2nd Floor Blenheim Court, Cheadle, Cheshire, England, SK8 2JY Company Registered in England and Wales Number 10992838 Data Protection ZB284067.
To find out more about managing your money and getting free advice, visit Money Helper, an independent service set up to help people manage their money.
*Our advice on your options is always free. We will always notify you if a solution you choose has any cost.
**Of 2,381 IVA cases approved between January-December 2023, the average expected write off assuming successful completion is 74%.
A debt write off amount between 25% and 75% is realistic, however, the debt write off amount will differ for each customer upon their individual financial circumstances and is subject to approval of their creditors. Any remaining qualifying unsecured debt in your IVA will be written off, however some unsecured debts will be excluded, such as court fines, child maintenance and student loans, therefore you will need to continue paying these both during and after the IVA.
