An IVA (Individual Voluntary Arrangement) is a statutory contract between you and your creditors. You pay back only what you can realistically afford with the remaining debt being written off. Normally an IVA lasts five to six years. The agreement covers all of your unsecured debts including loans, credit cards, catalogue and store cards, overdrafts etc.
Once your IVA proposal is drawn up, the insolvency practitioner will call a creditors' meeting. At this meeting creditors will vote on whether or not they will accept your proposal. Not all the creditors have to agree, for the proposal to be accepted. The proposal is accepted if more than 75 per cent of the creditors who vote or are represented at the meeting vote in favour. If enough creditors vote in favour, the proposal is accepted and is legally binding straight away. All creditors have to stick to the IVA proposal, even if they voted against it.
Is an IVA right for me?
We will look at your individual circumstances taking your income, your day-to-day expenditure and debt level into account before suggesting whether an IVA is right for you. We will never suggest an IVA unless we truly believe it is the best option for you and you are happy with your proposal.
We have relationships with other firms and we may ask the debtor if they would like to be passed to them. We will always make the debtor aware of free money advice but we may discuss another service with them as well.
What are the criteria I need to meet to apply for an IVA?
Usually you will:
have unsecured debts of more than £5,000
have 2 or more unsecured creditors
have a monthly surplus of at least £85
Aperture views the IVA as a flexible financial plan, which revolves around your needs and puts you back in control.
What will my monthly payments be?
The IVA monthly payments should be as much as you can reasonably afford after you have accounted for your living costs and those of your dependants. The amount should be the most that you can afford and that is achievable – whatever you propose should be viable for the duration of the proposed IVA.
What is the cost of an IVA?
An IVA can only be prepared for you by a qualified licensed insolvency practitioner, so there are inevitable professional fees. Our fees are paid for from your monthly contributions to creditors, so you do not need to make any other payments besides your monthly IVA contributions.
We keep IVA costs low by collecting much of the required information from you and using tailor-made automated procedures and specialist administrators to process cases. The costs involved are:
We earn our fees, like other IVA companies, in two ways:
The nominee fee (the fee for putting together the proposal and presenting it to your creditors) for a simple IVA is a fixed fee and will be laid out in your IVA proposal document. If you are a sole trader, partner in a business or have complicated affairs our fees may occasionally be higher – but we will explain the reasons why they are higher than our standard – and this still will not alter the payment you make. If the IVA is not approved by the creditors then they will not be liable for these fees
Supervisor fee: (the ongoing fee for managing your plan and liaising with your creditors). This fee will depend on your debt level and circumstances but we will always lay out these fees in your IVA proposal document so that you are aware of all fees ahead of entering your IVA.
There are also other costs known as expenses and disbursements. These are costs that are paid to third parties during your IVA and include insurance to protect any money paid to your IVA, a registration fee to register the IVA with the Insolvency Service. The cost of any legal advice specific to your case may also be charged as an expense. If you own a property there will be expenses to cover the cost of any valuations of your property and land registry fees.
Note: Unless you are repaying creditors in full plus the costs of the IVA, the fees and costs are borne by the creditors and agreed with them.
How long does it take to arrange an IVA?
This depends on how quickly we receive the required information from you. The quicker we receive information from you each time it is requested, the quicker we will be able to move. We want you to get the certainty of an IVA as soon as you can.
If we receive all the required information/documentation ASAP the Virtual Meetings of Creditors could be held within 3-4 weeks.
Will I have to close my bank account?
If you have debts with your bank, they can take money owed from the account your wages are paid into, whether you can afford it or not. This is called the Right of Set-off. Such debts can be in the form of an overdraft, credit card balance or personal loan.
Therefore, we do advise that you arrange a new basic banking facility before starting your IVA, if your current bank holds some of the debt that is to be placed in the IVA. We can help you with this!
People entering an IVA usually already have some adverse credit history and find it difficult to open a bank account. In this case you need to open a non-credit bearing basic account.
As an IVA is a private matter, your new bank/finance provider does not need to know about your IVA. Talk to one of our advisors for more information.
What happens to the interest on my debts?
One of the key advantages of an IVA is that it binds your creditors, legally, to freeze all future interest on your debt. This means your debt level will freeze upon approval of your IVA.
An exception to this rule would be if you are unable to make or keep up with your monthly payments. However, should this happen through no fault of your own, we are often able to agree a variation with your creditors. In some instances, creditors may put forward a modification to the proposal.
What happens if I don't qualify for an IVA or my proposal is rejected?
If your IVA proposal is not approved, we will speak to your creditors to understand why it rejected and see if there are any changes we can make to the proposal to gain approval.
If your proposal is still rejected, we will then discuss your alternative options with you.
Is my home safe in an IVA?
Providing that you keep up with the payments on the secured loans your property should be protected. Your creditors may require you to raise some funds from your property by way of re-mortgage in your final year of the IVA, if there is available equity (the amount left after your mortgage and other secured creditors have been considered).
If you have less than £5,000 of equity in your home then it is unlikely the equity in your house will be included in your IVA.
Please read the equity clause within your proposal to find out more or speak to one of our team.
Can I apply for an IVA if I do not own my home?
Yes, of course. You can rent a property, be part of a shared ownership scheme or live with parents whilst in an IVA.
What if the opportunity arose for me to buy my own home while I am renting and still in my IVA?
While you are in an IVA, you are unable to obtain further credit exceeding £500, therefore if you wish to consider buying your own home while in an IVA, you must first speak to your Supervisor and obtain their consent.
If you can secure a mortgage and provided your monthly mortgage payment is no greater than your monthly rent, your Supervisor is unlikely to have any objection. You must also to be able to confirm that the costs of running the new property will not be greater than those of your rented property. You will be required to put forward a variation to your creditors to be able to do this.
What happens to my secured loans in an IVA?
You may have loans other than your mortgage that are secured on your home. The most common will be ‘homeowner loans’ or ‘debt consolidation loans’. Secured loans cannot be included in your IVA and must still be repaid as well as your monthly IVA payments.
If you do not continue to make payments on your secured loans, your assets (home, car) could be at risk.
I own a property overseas, do I need to include this in my IVA?
Yes. All assets owned by you (other than household items) need to be included in the IVA.
Can I apply for an IVA if I am self-employed?
Yes, of course. However, IVAs for self-employed people generally require additional income and expenditure documentation, so that we can take your company into account as an asset.
Can I still keep my company as a business-owner?
Yes, you can. IVAs have helped thousands of sole traders, partners or company directors remain in business when faced with severe financial problems.
If you own a company or are a director of a limited company, generally you can retain your position whilst in an IVA, which is not the case should you be declared bankrupt. However, always check your Company’s Articles of Association to determine if there are any restrictions on acting as Director if you enter an IVA.
If I enter an IVA, can I still retain a position of public office, e.g. Company Director?
Unlike bankruptcy, an IVA does not legally restrict your ability to hold positions such as a Justice of the Peace or Governor of a School. However, there could be restrictions in the case of a Company Director depending on what the Company’s Articles of Association states.
It can also be the case that it is written into some employer’s terms of employment that entering into an IVA results in dismissal, particularly if they worked in the area of insolvency.
Can I enter an IVA if I am not in full-time employment or unemployed?
Yes, as long as you have a monthly surplus of at least £80 and meet the other criteria then you can apply for an IVA.
How are joint debts affected?
If you have joint debts, then you are both liable for the whole amount of the joint debt, even if only one of you goes into an IVA. An IVA will only deal with your liability. Any joint party will remain responsible for repayment of the whole of the debt outstanding.
Where there is a possibility that an IVA may adversely affect another person, we will advise the affected party to take independent advice, although they could also apply for an IVA.
How is a redundancy payment treated in an IVA?
The terms and conditions of most IVAs require you to disclose any redundancy payment that you may receive to your Supervisor. They also stipulate that you are entitled to retain a maximum sum equivalent to 6 months’ net take home pay with any surplus above that amount being due to your arrangement. This is on the basis you can secure alternative employment within that time period. In the event that you secure employment in a shorter time frame, please note that the balance of any funds you retained would then also fall due to the IVA.
Please also note that if you received a significant redundancy package, you might want to consider trying to introduce a lump sum in an effort to settle your IVA early. If that is an option that you wish to discuss, please do not hesitate to contact us.
What happens if I am made redundant?
We will look at the individual case when it comes to a change in circumstance but usually with redundancies the following process takes place:
We will look at how much you will receive as part of your redundancy package and depending on the size, will decide how much of it (if any) you will give to your creditors to repay your debt, while still allowing you to keep enough of it to continue to make your monthly contributions and expenditures for the next 6 months.
If you become employed again within 6 months, we will review how much of your redundancy you will then need to contribute toward your IVA and what your monthly payments will be going forward.
If you are not employed at the end of 6 months, we will need to re-evaluate your circumstances and affordable monthly payments.
Please remember that you are still in a legally binding contract with your creditors and the repayment of your debts still stands but we will do everything we can to come to the best solution for you.
What happens if I lose my job during my IVA?
Depending on your circumstances, we may be able to offer a short payment break to give you time to regain employment and return to a position of being able to afford your monthly repayments. We will also look at whether we need to adjust the amount of your repayments based on your new income.
It is worth noting that a payment break does not mean that the missed payments will be removed from your plan. You will need to recoup these costs by either extending your plan, increasing your payments temporarily or making a lump sum payment.
We understand the impact losing a job can have on your personal life and we will always do our best to find a solution that fits your circumstances, which is why it is important that you call us as soon as you anticipate any changes.
You may also be able to ask your creditors if they will vary the terms of your IVA to accommodate your change in circumstances.
I will be going on maternity leave, will this affect my payment plan?
It will depend on individual circumstances and your maternity pay entitlement. We can look at reducing your monthly payments on a temporary basis to reflect your drop in salary during your leave.
We may also be able to offer a payment break from your IVA to allow you to adjust before we reintroduce payments. It is worth noting that you will still owe the same amount of money set out in your IVA, but your payment may be increased temporarily or the length of your plan extended to recoup the missing funds.
When your maternity leave comes to an end, we may need to assess your circumstances to account for any financial changes to your situation; for example, you may decide to go back to work part-time and your income is then reduced or you may be entitled to child benefits which will see your income increased. Any changes will then need to be reflected in your future payments.
You may also be able to ask your creditors if they will vary the terms of your IVA to accommodate your change in circumstances.
What if I come into money or get a pay rise during my IVA?
If you have a windfall during your IVA or your monthly income increases, you will need to let us know so that we can look at how this affects your IVA. If your monthly income increases, it is expected that your payments will eventually increase with it.
If your windfall is not enough to pay back all monies owed, it is expected that the full amount would be given to your creditors on top of continuing your current monthly payments.
At the end of every 12 months during your plan, we will conduct an Annual Review to look at any changes and make sure that your payments are still affordable and reflective of your monthly surplus.
What happens if I am struggling with my monthly payments?
If you are struggling to make your monthly payments, the first thing to remember is don’t panic! We are here to help and we always have a solution. As soon as you find yourself struggling, it is important that you get in touch with us to see what we can do for you. Remember you are not alone!
We don’t want any of our clients to be worrying every month about whether they can make their next payment. We will always do our best to make sure your IVA works for both you and your creditors.
We can take a look at your individual arrangement and any changes in your income and expenditure to see if we can make what is known as a ‘variation’ to your plan. If there have been changes to your income or expenditure or perhaps you have suffered an unexpected expenditure for a car repair or have had to replace a washing machine; we will take this into account and could look at the possibility of a payment break or a change to your monthly payments.
Why do I need an Insolvency Practitioner (IP) for an IVA?
The role of the IP in your IVA is to manage the payments to your creditors and act as a point of contact for your creditors. They will negotiate the terms of your IVA proposal and work on your behalf to seek approval of your draft.
Having a qualified professional looking after your IVA takes the worry of having to deal with creditors and, as IPs are industry regulated, are bound by a legal code of practice.
Can creditors change their mind once the IVA has been agreed?
Creditors have 28 days to appeal but there needs to be grounds for this.
Once the IVA arrangement has been agreed your creditors are bound by the terms and as long as you maintain your obligations, (i.e. keep up the payments and tell your supervisor if your circumstances change) they cannot take any further action against you or demand a higher repayment from you.
Will my proposal be approved?
In order for your proposal to approved, at least 75% of your voting creditors by value must vote to approve the proposal. The good news is that even if one creditor rejects your proposal, as long as the approving creditors hold 75% of value, the proposal will be accepted.
What happens to my credit rating in an IVA?
Whilst waiting for your IVA proposal to be accepted by your creditors, we do advise you continue to make contributions, even if you cannot afford the minimum monthly payment. Failure to do this can seriously affect your credit rating.
An IVA will show on your credit file for 6 years after the approval of your proposal. When you successfully complete your IVA, we will provide you with a Certificate of Completion which you are able to show anyone you wish to confirm that you have successfully completed your arrangement.
We will also send a copy of your Certificate of Completion to your creditors so they can update their systems.
Is it true that an IVA will write off the remaining debt that I cannot afford to pay?
If you make all your monthly contributions and stick to the terms of your proposal, then you will not be required to pay any more than what was agreed in your IVA. Any remaining debt you had will be written off by your creditors and you will officially be free from your unsecured debt!
When can I expect an update in relation to the progress of my IVA?
Within two months of the anniversary of the date on which your IVA was approved, we are required by law to compile and issue a report to both you and your creditors to show how the arrangement is progressing. The Annual Progress Report is a standard document and – in addition to commenting on your conduct and compliance in respect of the IVA’s terms and enclosing a copy of your most recent income and expenditure review – it will also detail any and all monies received into your IVA in the reporting period (and since its approval). It will also outline what has been done with those funds.
What if I receive a “windfall” during my IVA?
Windfalls (or “After-acquired Property” as it may be known within an IVA) typically arise where you receive or become entitled to an asset during the course of your IVA. After acquired property relates to a wide range of potential assets which include, but are not limited to, the following:
Personal injury claims
In some cases, if the value of the asset is less than £500, you can retain it in full but in others, any and all windfalls would be due to the IVA (it depends on the terms and conditions of your specific IVA). The key thing to remember as regards to windfalls, is that you have a duty to contact us and make us aware of them. Any failure to do that may bring about the failure of your IVA so it is extremely important that you make us aware of any such assets as soon as possible.
It should also be understood that the payment of a windfall into an IVA will not bring about a reduction in the IVA’s duration or alter your payments unless the windfall sum is sufficient to repay your debts in full (and discharge the fees and costs associated with the IVA) or unless we can assist you to negotiate an early settlement of the IVA through a renegotiation of the terms (known as a “variation”).
If you do receive or do become entitled to an asset during the course of your IVA, please contact our Customer Service Team who will ensure that you are given the correct advice having regard to the specifics of your case.
What happens if my circumstances change?
If there is any change to your circumstances that will affect your ability to manage your payments to the IVA (or any other obligation), you should let us know right away. The sooner we know about a problem, the sooner that we can assist you to resolve it. A solution of some sort is achievable in the vast majority of cases. The important thing to remember is that we are here to assist you and so you shouldn’t hesitate to get in touch.
The Supervisor will have some discretions available to them to potentially reduce your payments, grant payment breaks and extend the term of your IVA and so almost every problem has a remedy. If the change in circumstances is likely to have a long-term effect, then you may need us to assist you in trying to renegotiate the terms of your arrangement with your creditors through a formal “Variation” to the terms.
I have missed some payments to my IVA. What can I do?
If you have missed some payments to the IVA, the most important thing to do is get in touch with our Customer Service team on 03339 397920. That team specialises in helping people who struggle with their payments for whatever reason and will work with you to resolve any issues and agree a realistic way forward. Remember, we are here to help and support you and a resolution is only a phone call or email away. If you have missed a payment, you can also make a payment online, it only takes a few minutes!
The terms of my IVA require me to attempt to remortgage in the final year of my IVA. What do I need to do?
An IVA will typically allow you to keep your home on the basis that – instead of selling it – you attempt to release equity (the difference between the value of your home and the amount you have left to pay on your mortgage) for the benefit of the creditors. Your IVA proposal document will detail the specifics of this requirement but in most cases you are obliged to attempt to release equity 6 months prior to the anticipated end date of your IVA.
The first step in that process is to assess the value of your equitable interest. To do that, the Supervisor of your IVA will need you to provide them with:
A current property valuation (this will advise the Supervisor of the current value of your property and can be obtained from an estate agent or online);
A current mortgage redemption statement (this will advise the Supervisor of the amount that you still have to pay in respect of your mortgage and is available on request from your mortgage provider); and
If you have any other loans or charges secured against your property, you will also need to provide a redemption statement for those (this will advise the Supervisor of the amount you still have to pay in respect of those loans and is available from the lenders)
Once the Supervisor is in receipt of that information, they will calculate the value of your equitable interest and – depending on how much is available – will then advise you as to what action (if any) you need to take. In general, there are two possible outcomes:
If your equitable interest is determined to be £5,000 or greater, you will need to take some independent financial advice and try to remortgage. If the financial advisor can secure a suitable loan product for you, you will need to provide Aperture with the details of the loan and obtain our consent to avail of the loan. The loan can then be progressed and the full value of your share of the loan should be paid directly to us by the lender; or
If your equitable interest is determined to be less than £5,000, you will not be required to do anything – your equitable interest will be excluded as an asset of your IVA on account of the fact that it has a minimal value.
In the event that your equitable interest is determined to be £5,000 or greater but you are unable to secure a remortgage or secured loan product, you will be obliged to either:
offer a third-party lump sum equivalent to 85% of the value of your interest in the property; or
make 12 additional monthly contributions (with the aggregate sum due to be to the IVA paid being limited to 85% of the value of your interest in the property).
This obligation is a significant and important one so if you have any queries or concerns about it please get in touch with us and we will be happy to help.
How will I know how my IVA is progressing?
The Supervisor of your IVA is required to issue an annual progress report to you and your creditors within two months of the anniversary date of the approval of your arrangement – that report will help you understand how the arrangement is progressing and whether there are any issues that need attention so please ensure that you read those reports each year.
When will I make my last monthly contribution to the IVA?
Most IVAs anticipate that contributions will be made for a period of 60 months with a possible additional 12 months’ payments being required if you are a homeowner. As such, your final payment will normally fall due 5 or 6 years after your proposal was approved. However, it is not uncommon for unforeseen changes in an individual’s circumstances to arise during the course of an IVA and – to deal with those changes – you may need to seek alterations to your payment schedule which may mean that the terms of your IVA are extended. Similarly, if you miss payments to your arrangement or need more time to fulfil other obligations under your IVA, then the term of the arrangement might also change.
What could be delaying the closure of my IVA?
In broad terms, our ability to close an arrangement will be impacted by an outstanding obligation that needs to be addressed. The most common obligations that arise will typically relate to the following:
An outstanding Income and Expenditure review;
An outstanding requirement in relation to any obligation to release equity;
An outstanding amount due to the IVA in respect of additional income;
Unresolved arrears that accrued in respect of missed payments during the IVA; and
An outstanding matter in relation to investigations into mis-sold Payment Protection Insurance (PPI).
If you think that you do not have any outstanding obligations and your IVA should be completed and it has not, please just get in touch and we will review your case and provide you with an update.
Why would compensation in respect of claims for mis-sold PPI be due to my IVA?
Firstly, the agreed terms of your IVA may state that PPI or similar claims are assets of your arrangement. In broad terms, most IVAs approved since 2012 will include such a term which will explicitly refer to PPI. On older cases, the standard terms and conditions of the IVA will typically include what is called an “All Assets Clause” which is a common term that essentially states that all assets – including PPI – will be an asset of the IVA unless creditors agreed to their exclusion from the arrangement.
It should also be noted that in 2013 Aperture sought to vary the terms of all arrangements under our Supervision to clarify the treatment of PPI. This was to ensure ensure that it no longer impacted our ability to bring an IVA to a successful conclusion where a client was cooperating with their PPI obligations. If they agree to the variation our clients could benefit from the statutory interest element of any successful PPI claim (net of costs). Any successful PPI claims paid into your IVA will enable you to pay back more of your debt which is in keeping with the arrangement’s two key purposes –
to ensure that your level of debt was frozen and afford you protection from bankruptcy or any other recovery action and
to enable creditors to receive the best possible return having regard to your circumstances.
Is PPI still due to my IVA even though my IVA is closed?
Yes, the case of James Green v James Patrick Wright confirmed that the PPI is due into the IVA after completion or termination.
I believe I am entitled to a portion of PPI that has been paid into my IVA. When can I expect to receive my refund?
Most of the cases under Aperture’s Supervision were put through a variation process in 2013 whereby creditors – amongst other things – agreed that clients who agreed to the variation could benefit from the statutory interest element of any PPI claim net of costs. In that scenario, where a lender has written to a client and advised them that a PPI mis-selling claim has been successful, those funds will typically be paid direct to the claims management company that was engaged by the client and will then be put through a reconciliation process to ensure that the correct sum has been paid in respect of the correct claimant before being paid into your IVA.
Given the high volume of PPI payments that claims management companies are dealing with and the corresponding volume that is then forwarded to Aperture for allocation to the correct account, the reconciliation process can take up to 60 days to complete. As such, whilst you may be aware of the fact that a PPI payment has been made to your IVA, please appreciate that Aperture may not yet be in receipt of the funds and therefore cannot process any refund that may be due to you. Furthermore, it should be understood that, in an effort to minimise the costs to the arrangement, the Supervisor intends to process your refund once all PPI matters have been investigated.
If you are unsure as to the status of your claims investigation, please be advised that your claims management company is best positioned to advise you. If Slater Hayward Law (SHL) are acting on your behalf, please call them on 01254 271 980 to speak to one of their advisors. Alternatively, if you engaged a different claims management company, please contact them directly for an update.
Will I receive anything when my IVA completes?
When the Supervisor of the IVA is satisfied that all obligations have been fulfilled, we will issue a final report together with a Completion Certificate. A copy of that report will be sent to you, each of your creditors and the Insolvency Service advising that the IVA is now at an end.
The final report will include information regarding all of the funds received into the IVA and what has been done with those monies. It will also show how much of your debt has been repaid (the dividend) and how much has been written-off by your creditors.
How long will it take for my credit file to be updated when my IVA completes?
Aperture do not have any remit to update your credit file – that responsibility rests with your creditors and they will typically take steps to update your credit file data around 8 weeks after we issue your final report. Please visit the Equifax, Experian and Call Credit websites for more information on your credit file and actions that you can take to ensure that the information held is accurate and up to date. Please also ensure that you keep a copy of your IVA final report and completion certificate safe as you may need it to evidence that the IVA has come to a successful conclusion.
Will the restriction that was registered against my property be removed when the IVA completes?
Yes. We will file the necessary statutory form at Land Registry within two weeks of the final report being sent to you, your creditors and the Insolvency Service.
How & when will my name be removed from the Personal Insolvency Register?
The Personal Insolvency Register is administered by the Insolvency Service or for the Northern Ireland Insolvency Service. We will send them a copy of our final report confirming the completion of the IVA and they endeavour to update the register within three months of being notified of the completion although it is often updated much sooner than that.
Can I vary the terms of my IVA proposal?
You may be able to vary the terms of your IVA with the agreement of your creditors. A variation involves preparing a report to your creditors and making a decision for you to propose a change to your original IVA proposal. Please contact us for more details