In order to know whether you qualify for an IVA, you’ll need to provide full details of your income, assets and debts. We can then conduct an evaluation to determine your eligibility.
Even if you don’t qualify for an IVA, there are other debt solutions which you may wish to consider. In every instance, Bennett Jones can guide you.
You are expected to pay what you can reasonably afford after payment of household bills, as well as some income from additional sources and overtime pay earned at work. If you own any assets of value other than your house, car or pension you will may be asked to sell these to assist in paying your debts. Any inheritance or lottery wins must also be used to contribute.
Your income and expenditure will then be reviewed annually to check if it is reasonable to request that you increase your repayment contributions.
Creditors do not expect you to sell your house to repay any of your debts when entering into an IVA. The payments you make will always take account of the amount you have to pay towards your mortgage and any secured loans against your property so that you can be sure you have enough money each month for repayments.
For standard consumer IVAs, the calculation of your equity will be done by firstly obtaining an online valuation of your property. Your creditors then use this as a starting point from which they allow a deduction of 15%. So, if your property is valued at £100,000, your creditors would start the calculation at £85,000.
From this figure, the balance owed to any mortgage lender or secured loan creditor is then deducted. The interest of any joint owner, such as your partner, spouse or relative, will also be deducted.
In a standard personal IVA, the fees and expenses are to some extent related to the amount you pay into the IVA. There are the nominee’s fee, supervisor’s fee and disbursements to consider.
This is the fee paid for the work done before your IVA is approved, including the fact-finding work, the preparation of your proposal and the review of your proposal by the licensed Insolvency Practitioner (who acts as your IVA ‘Nominee’). This fee is typically fixed with the approval of creditors between £1,000 and £2,000.
This is the fee paid for the work undertaken by the Insolvency Practitioner and their staff for monitoring the implementation of your IVA proposal. In standard personal IVAs, creditors typically approve this fee at 15% of the remaining amount paid into the IVA after payment of the nominee’s fee.
Disbursements or expenses are incurred in addition to the nominee and supervisor fees. These expenses include fees payable to register the IVA with the Secretary of State, an insurance bond, software licence fees, document storage and bank charges.
For standard personal IVAs, the fees and expenses are payable only if the IVA is approved by your creditors. No payment is required as the fees will be deducted from the IVA contributions which are paid by you.
After payment of the fees and expenses, the remainder is distributed to your creditors. This means your creditors bear the costs and you simply pay into the IVA the agreed contributions.
If your IVA proposal follows the IVA Protocol and terms and conditions, there is a good chance that your creditors will vote to approve it. In some cases, it may be advisable for your Insolvency Practitioner to discuss the outline terms of your proposal with major creditors before a formal meeting is arranged.
If you are struggling to manage your IVA payments because of a change in your circumstances (e.g. ill health), it is up to your IVA supervisor’s discretion to allow payment breaks. If the change is more serious and you are unable to afford payments for several months, your IVA supervisor will discuss whether it is possible to propose a variation of your IVA (which creditors will need to approve).
A licensed Insolvency Practitioner is an individual who has been granted a licence by a professional body authorised by the Secretary of State. Licensed Insolvency Practitioners must demonstrate they have the necessary skills and qualifications to act in this capacity – like those here at Bennett Jones.
IVA proposals contain provisions for payment breaks of up to six months to assist with managing temporary financial difficulties. If payment breaks are longer due to issues like unemployment following redundancy, creditors may change your IVA – even suspending payments for up to 12 months. As long as you act fairly and responsibly towards your creditors, it is likely your IVA will be successfully concluded.
Yes, always. Obtain the information you need from a team like Bennett Jones, who will be able to explain the various options which may be available to you for managing your debts.
Contact us today on 0800 7710 073 if you have any more questions about IVAs or other debt solutions. Whatever your situation, we will be able to help you find the best course of action.