If you’re thinking of going into an IVA then it’s understandable you’ll want to collect as much information as possible – especially when it comes to any implications.
In essence, IVA’s can provide the ideal solution when it comes to consolidating debts and also being given the opportunity to rebuild your financial future going forward. However, that’s certainly not to suggest that they don’t impact on other areas of your life.
In this article we take a brief look at some of the issues you might want to consider and/or raise with your chosen advisor before you decide whether an IVA is right for YOU:
- Employment
Whilst you’re not legally obliged to inform your employer of your IVA certain professions are exempt from this – such as solicitors and accountants. To ensure you’re not in breach of any obligations, be sure to check your contract of employment and if necessary, inform your employer (or have your advisor do it).
- Possessions
Whilst most personal possessions won’t be affected by you entering into an IVA you should mention anything of value to your advisor. You may also, of course, want to consider selling any assets (such as jewellery, vehicles, caravans or boats etc.) in order to clear some of your debt.
- Your home
If you own a property then you won’t be required to sell it for the purposes of an IVA. However, you may be required to re-mortgage during the last year of your IVA in order to release any equity. In some cases this may not be a requirement (for example, if your equity is valued at less than £5,000.00) but it’s certainly worth discussing and taking into account before you commit to any future arrangement.
- Joint debts
If some (or all) of your debts are joint then you may wish to address these together. Whilst an IVA can’t be made in joint names, you can set up interlocking IVA’s which will help address any joint liabilities.
- Future income
Most IVA’s will contain a ‘windfall clause’. This means that, should you come into money during the IVA arrangement then you may be required to pay the funds straight into your IVA. Typical examples of this include lottery wins, PPI or compensation claims and inheritance funds.
- Credit ratings
If you enter into an IVA then it’s unlikely you’ll be successful in obtaining credit throughout its duration. What’s more, if you want to borrow more than £500.00 then you’ll need written permission from your insolvency practitioner (unless the funds are needed for public utilities such as water, electricity or gas).
- Insolvency Register
Finally, if you apply for an IVA then you must remain mindful that the details of it will be entered onto the Insolvency Register. This Register is available to view online and is free of charge. Your details will remain on it for the duration of the arrangement and for 3 months afterwards. Whilst you’re not obliged to inform anyone of this it may be viewed by future lenders as part of their screening process.
