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TRANSCRIPT
IVA guide
Free, ImpartialDebt Advice
StepChange Debt CharityIVA guide
Contents
Introduction How this guide will help you 3
Section 1 IVAs 4• AboutIVAs
• HowanIVAworks
• WhyanIVA?
• HowwillanIVAaffectme?
• IVAsfromStepChange
• IVAsataglance
Section 2 Other debt solutions 9• Debtmanagementplan(DMP)
• Debtrelief order(DRO)
• Bankruptcy
Section 3 Our debt help 11• Howcanwehelp
• ContactingStepChangeDebtCharity
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StepChange Debt CharityIVA guide
Introduction
Free anonymous debt adviceFreedebthelponlinefromStepChangeDebtCharityatwww.stepchange.org
How this guide will help you
StepChangeDebtCharityisaregisteredcharitythathelpshundredsof thousandsofpeoplewithdebtproblemseveryyear.Wegivefree,realisticdebtadviceandcanassistwitharangeof debtsolutions.
If you’restrugglingtokeepupwithyourdebtrepaymentsandlookingforawaytoregaincontrolofyourfinances,youmightbewonderingif anindividualvoluntaryarrangement(IVA)isthebestwayforwardforyou.Thisguideisheretoanswersomeof yourquestionsaboutIVAs.
Theguideexplains:
•WhatanIVAis,
•HowanIVAworks,
•WhoanIVAisfor,
•HowhavinganIVAcouldaffectyou,
•Howwecanhelp,and
•Howyoucancontactus.
IVAsarenotsuitableforeveryone.It’sveryimportantthatyougetprofessional,impartialadvicebeforetakingonanIVA,becausetheremaybeamoreappropriatedebtsolutionavailable.
OuronlineStepChangeDebtRemedytoolcangiveyouananonymousassessmentof yoursituationandtailoreddebtadvicetohelpyoudecidewhichisthebestdebtsolutionforyou.
If anIVAisthebestdebtsolution,StepChangeVoluntaryArrangements,ourownIVAservice,canhelpyouthroughthewholeprocess.
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StepChange Debt CharityIVA guide
IVAs
About IVAs
IVAstandsforindividualvoluntaryarrangement.AnIVAisatypeof insolvencydesignedtohelppeoplewithunsecureddebtsthatcan’tbepaidbackinarealistictime.
AnIVAisalegallybindingagreementbetweenyouandyourcreditors.WithanIVA,yourcreditorsagreetoacceptanaffordablemonthlypaymenttowardsyourdebtsoverasetperiod:usually5or6years.Insomecases,youmightbeabletomakealumpsumpaymenttowardyourdebtsinstead,oracombinationof monthlypaymentsandalumpsum.
Duringtheperiodof yourIVA,providingyoukeeptothetermsof youragreement,yourcreditorsarepreventedfromcontactingyou,pursuingyouforthedebt,oraddingfurtherchargesorinteresttotheamountyouowe.Attheendof thespecifiedperiodanyremainingunsecureddebtwillbewrittenoff.
YoucannotarrangeanIVAbyyourself,youwillneedthehelpof anInsolvencyPractitioner.IVAsarenotsuitableforeveryoneandwestronglyrecommendthatyougetprofessional,impartialadvicebeforetakingonanIVA.OurdebtadvisorsandonlineStepChangeDebtRemedytoolcangiveyouthefree,realisticadviceyouneedtofindoutwhichisthebestdebtsolutionforyou.
If anIVAisthebestdebtsolutionforyou,StepChangeVoluntaryArrangements,ourownIVAservice,canhelpyoueverystepof theway.
Free debt adviceFreedebthelpfromStepChangeDebtCharitycall0800 138 1111
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StepChange Debt CharityIVA guide
IVAs
How an IVA works
If anIVAisthebestsolutionforyourparticularcircumstances,youwillneedanInsolvencyPractitioner(IP)tosetoneuponyourbehalf.
IVAproposal
YourIPwilllookatyourfinancesandhelpyoutodrawupaproposaltosendtoyourcreditors.Youneedtochecktheproposalcarefully.
Thisproposalwillrecommendthatyouravailablesurplusincome(inotherwords,moneyyouhaveleftoverafterpayingyouressentiallivingexpenses)isusedtorepayyourdebt.Thearrangementwilllastforanagreed,fixedperiod:usually5or6years.Afterthefixedperiodhasended,anydebtthatyouhaven’trepaidwillbewrittenoff.
Insomecases,youmayalsoproposethatyoupayalumpsumtowardsyourIVA.If yourIVAproposalisaccepted,therewillbeafeetopay,butthiswillbeincludedintheagreedmonthlypaymentyouaremakingtowardsyourdebts.
IVAvote
YourIPwillsendyourIVAproposaltoeachof theunsecureddebtsheldbyyourcreditors.Acreditors’meetingwillthentakeplaceduringwhichyourIVAproposalwillbeacceptedorrejected.Themajorityofyourcreditorswillneedtovoteinfavourof theIVAforittogoahead.Thismeansthatamongthosevotingontheday(somemaynotvote),creditorsholdingover75%of thetotalvalueof yourdebtmustagreetoyourIVA.
Creditorsmayputforwardmodificationstotheproposalbuttheycannotimposetheseonyou–youcandecidewhetherornottoacceptthem.
Free anonymous debt adviceFreedebthelponlinefromStepChangeDebtCharityatwww.stepchange.org
OnceyourIVAisagreeditbecomeslegallybinding.Noneof yourcreditors(eventhosewhodidnotvoteorwhovotedagainsttheIVA)willbeabletopursueyoufortheunsecureddebtoraddfurtherinterestorchargestoit,aslongasyoukeeptothetermsof yourIVA.
Completionof yourIVA
YourIPwillreviewyourfinancesonceayearandsendanannualreporttobothyouandyourcreditors.YourIPwillalsoletyouknowwhenyourIVAhasbeencompleted.
WhenyourIVAiscompleted,anyremainingunsecureddebtwillbewrittenoff.
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StepChange Debt CharityIVA guide
IVAs
Why an IVA?
Formanypeoplestrugglingwithrepayments,anIVAcanbeagoodsolutiontotheirdebtproblems.
Moreaffordable
AnIVAcanmakerepayingyourdebtseasierandmoremanageablebecauseyourcurrent,multipledebtrepaymentswillbecombinedintoone,reducedandaffordablemonthlypayment.
YourInsolvencyPractitionerwilltakeallyouressentiallivingexpensesintoaccountsoyouwillonlypaywhatyoucanaffordtowardsyourdebts.
Lessstressful
AnIVAcanreducemuchof thestressassociatedwithyourdebtproblem.Aslongasyoukeeptothetermsof yourIVA,yourunsecuredlendersarepreventedbylawfromcontactingyou.
Thismeansalllettersandtelephonecallswillstop.Yourcreditorswillnotbeabletotakeanyfurthercourtactionagainstyoutorecoverthedebt.Theywillalsonotbeabletoaddanyfurtherinterestorchargestoyourdebts.
What’smore,underanIVA,youmaybeallowedtokeepanypropertyyouown,makingitamorefavourablealternativetobankruptcyformanyhomeowners.
Freshstart
OnceyouhavecompletedyourIVA,yourremainingunsecureddebtswillbewrittenoff,soyoucanmakeafreshfinancialstart.
Free debt adviceFreedebthelpfromStepChangeDebtCharitycall0800 138 1111
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StepChange Debt CharityIVA guide
IVAs
How will an IVA affect me?
Werecommendthatyougetsomeprofessional,impartialadvicebeforetakingonanIVA,asthereareseveralrestrictionsandobligationsthatyouneedtoconsider.
Eligibility
NoteveryonewillqualifyforanIVA.IVAsaregenerallysuitableforpeoplewithasustainableregularsourceof income.PeoplewithalumpsumtopaytowardstheirdebtsmayalsoqualifyforanIVA.
Onlyyourunsecureddebtscanbeincluded.Examplesof unsecureddebtsincludecreditcards,personalloansandoverdrafts.Secureddebts(likemortgagesorsecuredloans)andsomeotherdebts(includingstudentloans,finesandchildsupport)willstillhavetobepaidseparatelyoutsideof theIVA.
Restrictions
AnIVAshouldbecarefullyconsideredbecauseofthepossibleconsequencesforyourpersonal,professionalandfinanciallife.
Theseincludethefollowing:
•Yourcreditratingwillbeaffectedforsixyears,startingfromthedatethearrangementisagreed.
•YouwillhavetokeeptoabudgetforthefulltermofyourIVA:usually5or6years.
•AnIVAmayaffectthetermsof youremployment;youshouldcheckyourcontractorspeaktoyourHRdepartment.
•AnIVAcanalsoaffectanyhirepurchaseagreementsyoumighthave.
•Overthetermof theIVAyoumustdeclareanyinheritance,bonusesorwindfalls.ItislikelyyouwillhavetopaytheseintoyourIVA.
•YourIVAwillberecordedontheInsolvencyRegister.TheregisterismaintainedbytheInsolvencyServiceandisavailableforviewingbythegeneralpublic.Itcontainsalldetailsof currentIVAs.
Yourhome
UnderanIVAitisunlikelythatyouwillhavetosellyourhome.However,dependingontheamountofequityinyourhome,youmayhavetoremortgageyourpropertysixmonthsbeforetheendof yourIVA.
Thelevelof remortgageisrestrictedandshouldnotusuallytakeyoursecuredborrowingabove85%ofthevalueof yourhome.AnymoneyreleasedfromthiswillbeusedtopayintotheIVA.
YourInsolvencyPractitioner(IP)willdiscussthiswithyouinmoredetailandwillincludeanythingrelatedtotheremortgagewhentheyhelpyoutodrawuptheIVAproposaltobesenttoyourcreditors.
Theroleof theinsolvencypractitioner
TheIPbecomesthesupervisorof theIVAafterithasbeenapproved.Theirroleistoacteven-handedlybetweenyou(thedebtor)andyourcreditorstoensurethatthetermsof theIVAarefulfilled.
Default
If youdon’tkeeptothetermsof yourIVA-forexample,becauseyoumissyourmonthlypayments-youmayaskyourcreditorstovarythetermsof yourIVA.If thisisnotpossibleyourIVAmaybeterminated.
If yourIVAisterminated,thesupervisormaypetitionforyourbankruptcybutrarelydoesso.If yourIVAisterminated,anycostsof yourIVAwillbeincludedwithinyourtotaldebt.
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StepChange Debt CharityIVA guide
IVAs
Our IVAs
WecanhelpyousetupyourIVAthroughourownindividualvoluntaryarrangementcompany:StepChangeVoluntaryArrangements.
RealisticIVAadvice
Therearemanydebtsolutionsavailable.WewillonlyrecommendanIVAif itisthemostappropriatedebtsolutionforyou.Ourdebtadvisorswilllookcarefullyatyoursituationandcircumstancesandadviseyouonallthesolutionsavailabletoyou.
IVAwithStepChangeDebtCharity
If youdodecidetogoaheadwithanIVA,StepChangeVoluntaryArrangementscanhelpyouthroughtheprocess.WehaveourownInsolvencyPractitionerwhocanreviewyourfinancesandhelpyoutoputforwardtheIVAproposaltoyourcreditors.
BecauseourIVArecommendationsarerealistic,thevastmajorityof ourproposalsareacceptedbycreditors.Therearenoset-upfeestobepaidinadvanceof yourIVAbeingagreed.YouwillhavetopayfeesonceyourIVAisinprogress,butthesewillbepaidaspartof yourmonthlyrepaymentstowardsyourdebts.YouareundernoobligationtotakeupanIVAwithStepChangeVoluntaryArrangements.WewillgiveyouimpartialandrealisticadviceaboutwhetheranIVAreallyissuitableforyouandcansupportyouthroughtheprocess.
Insomecases,wereferourclientstoourIVApartnerGrantThronton,forexampleif youliveinNIorifyou’reself-employed.
StepChangeVoluntaryArrangementsfacts
•Establishedin2007
•Whollyownedbyourumbrellacharity–theFoundationforCreditCounselling
•Sharesthesameethicsandvaluesasourcharity
•Thousandsof StepChangeVoluntaryArrangementsclientshavetheirIVAsapprovedbycreditorseveryyear
IVA Summary
Werecommendthatyougetsomeprofessional,impartialadvicebeforetakingonanIVA,asthereareseveralrestrictionsandobligationsthatyouneedtoconsider.
•Suitableforthosewithunsecureddebtsandaregularsustainableincomeorforthoseabletoofferalumpsumpayment
•ArrangedbyanInsolvencyPractitioner(IP)
•YourIVAproposalmustbeagreedbythemajorityof yourcreditorswhovote,forittogoahead
•Programmeof affordablemonthlycontributionsforafixedperiod;usuallyover5or6years
•Sometimestherecanbealumpsumtopayinsteadof,oraswellas,makingmonthlypayments
•DuringyourIVA,creditorscannotpursueyouoraddinterestorchargestoyourdebt
•Attheendof yourIVA,anyremainingunsecureddebtiswrittenoff
•Feesarepayablebutwillbetakenfromyourregularmonthlypayments
•Youmayhavetoreleaseanyequityinyourhometowardstheendof yourIVA
•StepChangeVoluntaryArrangementscansupportyouthrougheverystepof yourIVA
Free debt adviceFreedebthelpfromStepChangeDebtCharitycall0800 138 1111
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StepChange Debt CharityIVA guide
Other debt solutions
Everyone’ssituationisdifferentanditmaybethatanIVAisnotsuitableforyourparticulardebtproblem.
Thereareanumberof otherdebtsolutionsavailable,anditispossiblethatoneof thesewillsuityoursituationmuchbetterthananIVA.Thisiswhywerecommendyougetimpartial,professionaldebthelptodeterminethebestsolutionforyou.
OuronlineStepChangeDebtRemedytoolcanhelpyouwiththis.Inthemeantime,thispartof theguidewillsummarisesomeof theotherdebtsolutionsavailable,including:
•Debtmanagementplan(DMP)
•Debtrelief order(DRO)
•Bankruptcy
Debt management plan (DMP)
Adebtmanagementplan(DMP)allowsyoutomakeasingle,affordablemonthlypaymenttowardsyourdebts.ADMPissuitableforpeoplewhohavesomemoneyleftovereachmonth,butdon’thaveenoughtocoveralltheirdebtrepayments.
HowdoesaDMPwork?
ADMPisnormallyarrangedthroughathirdparty.Thethirdpartywillworkouthowmuchyoucanrealisticallyaffordtopaytowardsyourdebtseachmonth.
Theywillthencontactyourcreditorsaskingthemtoacceptareducedmonthlypayment.Thethirdpartywillalsomanagethedistributionof themoneybetweenallyourcreditors,sothatyoudon’thavetodealwiththem.
HowmuchdoesaDMPcost?
ManyprivatedebtmanagementcompanieswillsetupaDMPforyou,butwillchargefeesfortheirservices.
Thereisnoneedtopayforadebtmanagementplan.CharitieslikeourselvescansetupyourDMPfreeofcharge,withnohiddenfeesattached.Wewillalsomakesurethatyouonlypaywhatyoucanafford,soyoucankeepupwithyourday-to-daylivingcostsaswell.
•Itwilltakelongertorepayyourdebts
•Interestandchargesmaymeanthetotalpaidmaybehigher
•Itwillimpactonyourcreditrating
FreeDMPadvice
If youareconsideringstartingaDMP,makesureyougetimpartialadvicefromadebtmanagementcharity,likeourselves.Wecanadviseyouonwhetheradebtmanagementplanissuitableforyourneeds.
WehaveahighsuccessratewithDMPsbecauseweonlyeverrecommendthemintherightcircumstances.
Free anonymous debt adviceFreedebthelponlinefromStepChangeDebtCharityatwww.stepchange.org
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StepChange Debt CharityIVA guide
Other debt solutions
Debt relief order (DRO)
Adebtrelief order(DRO)freezesyourdebtsfor12months,afterwhichtimetheyarewrittenoff.
WhoqualifiesforaDRO?
ToapplyforaDROyoumustowelessthan£15,000(£20,000after01/10/2015)inunsecureddebts.Youmustalsohavenomorethan£50inavailablemonthlyincome,inotherwords,nomorethan£50lefteachmonthafterpayingyouressentiallivingexpenses.
YoucannotapplyforaDROif youareahomeowner.DROsarealsonotsuitableif youhaveassetsthatareworthmorethan£300(£1000after01/10/2015),withtheexceptionof onecar,whichcanbeworthupto£1,000.
HowdoesaDROwork?
YoucannotapplyforaDRObyyourself.Athirdpartymustsubmityourapplicationtotheofficialreceiver.Thereisafeeof £90andthissumisnotrefundableifyourapplicationisunsuccessful.
Youmuststicktotheconditionsof yourDROfora12-monthperiod.Duringthistime,yourcreditorscannotpursueyouforyourdebt.Attheendof the12months,aslongasyouhavekepttothetermsof yourDRO,yourdebtwillbewrittenoff.
ADROwillappearonthepublicregisterandwillaffectyourcreditrating.
FreeDROhelp
OurprofessionaldebtadvisorswilladviseyouonwhetheraDROissuitableforyou.Wecantalkyouthroughtheprocessesinvolvedand,shouldyoudecidetogoahead,weareoneof thefeworganisationsthatcanapplyforaDROonyourbehalf.
Bankruptcy
Bankruptcyissuitableforpeoplewhoareunabletopayofftheirdebtswithinareasonabletime.It’saformof insolvency,soyourassetswillusuallybesold.Thismeansbankruptcyisunlikelytobeasuitableoptionifyourassetsareworthmorethanyourdebt.
Howdoesbankruptcywork?
Bankruptcywritesoffallyourunsecureddebts,allowingyoutomakeafreshfinancialstart.However,you’llbesubjecttoanumberof restrictionsduringthetermof yourbankruptcy(usually12months).
Tofileforbankruptcy,youmustapplytocourtandpayadepositof £525andanycourtfees.Youmaybeexemptfrompayingthecourtfeeif youreceivecertainwelfarebenefits.
Youmayalsohavetomakemonthlypaymentstowardsyourdebtsaspartof anIncomePaymentAgreementforuptothreeyears.
Howcouldbankruptcyaffectme?
Bankruptcycouldhavesignificantconsequencesforbothyourpersonalandprofessionallife.Youmayhavetosellyourhomeandtherecouldalsobeanimpactonyourjob,business,carandbankaccount.Bankruptcywillalsoseriouslyaffectyourcreditratingforsixyearsfromthedateyouaremadebankrupt.
Freebankruptcyadvice
Bankruptcyisabigsteptotakewithseriousimplications.If youarethinkingaboutmakingyourselfbankrupt,talktousfirstandwewillhelpyoudecideifitreallyisthebestsolutionforyou.
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StepChange Debt CharityIVA guide
Our debt help
Weknowdebt.Weunderstandhowstressfuldebtproblemscanbe.
It’simportanttorememberthatyouarenotalone;millionsof peopleintheUKareworriedabouttheirdebtproblems.Eachyearwehelphundredsofthousandsof peoplewithallsortsof debtproblems,bothbigandsmall.
Actnow
There’snopointburyingyourheadinthesand.Thelongeryouwaitbeforetakingactiontoresolveyourdebtproblem,theworseitislikelytoget.
Actnowandbeginyourjourneytowardsbecomingdebtfree.Onceyouhavestartedtotackletheproblem,youwillfeelmuchbetterandmuchof thestressandworryyouhavebeenfeelingwillbegintoreduce.
Whatyoucando
Herearesomestepsthatyoucantaketodaytostopyourdebtproblemgettinganyworse:
•Don’ttakeonanymoreloans,
•Don’tconsolidateyourdebtsintoadebtconsolidationloanwithoutgettingadvicefromusfirst,
•Neversecureanyof yourdebtsagainstyourhome,
•Stopusingyourcreditcards,and
•Seeksomefree,professionaldebtadviceassoonasyoucan.
How we can help
If youareworriedaboutyourfinancialsituation,it’sveryimportantthatyougetfree,professionalandimpartialdebtadviceassoonaspossible.
Werecommendthatyouconsultadebthelpcharity,likeourselves,tobesureof gettingtherealisticadvicethatyouneed.
Everyyearwehelpthousandsof peoplewiththeirdebtproblems.Weprovidefreedebthelpandimpartialadviceonthebestdebtsolutionsavailabletosuityou.
If youwouldlikeaninstant,anonymousassessmentof yoursituation,tryStepChangeDebtRemedy,ouronlinetool.StepChangeDebtRemedywillaskyousomestraightforwardquestionsaboutyoursituationandyouwillgetapersonalbudget,tailoreddebtadviceandarecommendationonthebestdebtsolutionforyou.
Free anonymous debt adviceFreedebthelponlinefromStepChangeDebtCharityatwww.stepchange.org
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StepChange Debt CharityIVA guide
Our debt help
Contact us
AstheUK’sleadingdebthelpcharity,youcanbesurethatallouradviceisfree,confidentialandimpartial.
StepChangeDebtCharityonlineadvice
OuronlineStepChangeDebtRemedytoolisavailable24hoursadaytogiveyoufree,anonymousandpersonaliseddebtadvice.
StepChangeDebtCharitytelephoneadvice
If youwouldprefertotalktosomeone,pleasecallourfreephonenumber:08001381111*toarrangeatelephoneappointment.Ourlinesareopenfrom8amto8pm,MondaytoFridayandSaturday9amto3pm.If youhavehearingdifficulties,callususingtextrelay.
*Callsmayberecordedandmonitoredforqualityandtrainingpurposes.Callsfrommobilesarefree.
Free debt adviceFreedebthelpfromStepChangeDebtCharitycall0800 138 1111
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