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Key Effects . . . of Proposing an IVA
1 |
The Effect on Your Current Assets
Assets such as your home, savings and investments
are at less risk than with bankruptcy - but they are still at risk.
But because the debtor usually proposes the IVA,
and because creditors are being offered regular payments, they tend
to be more flexible.
The home and assets will still be at risk if
creditors decide not to exclude them. However, it is more usual for
creditors to require savings and realisable assets (endowment
policies, premium bonds, ISAs) to be encashed with the home remaining
relatively untouched except for the possible release of some of the
equity available at the end of the IVA. |
2 |
The Effect on Your Future Assets
Where the debtor expects to receive an
inheritance or already has assets, consideration should be given to
any increase in value they may have whilst an IVA is in place.
It may be possible to arrange matters to avoid
losing out in such circumstances (such as amending a will) but not by
transferring assets in a manner designed to evade your liability to
your creditors. |
3 |
The Effect on Your Future Credit
IVAs do impair your credit worthiness. Whilst the
arrangement is in place, credit will be something that you will have
to pretty much live without.
Once the IVA has expired, you will still find
obtaining new credit facilities difficult. Mortgages, for instance,
are available but they usually prefer you to have six or twelve
months of space between you and the IVA before lending you money for
a house purchase. They will usually also require a larger deposit for
the property and charge you an above average interest rate ... since
you are considered a greater risk. |
4 |
The Effect on Your Reputation and Stress
IVAs do not have the stigma that is attached to
bankruptcy, so the impact on the reputation is minimal. They will be
recorded and added to your credit file, on which they will stay for
at least 6 years.
Whilst they are supposed to relieve stress,
establishing an Individual Voluntary Arrangement can still be
stressful, even if only temporarily. Initiating an arrangement and
obtaining final agreement from creditors can still be time-consuming. |
5 |
Do You Have the Resources?
The fees of seeting up an IVA can be upwards of
£2,500 plus VAT and expenses and then there will be the
administration fees in addition to that.
Most insolvency practitioners will require that
at least £750 is paid in advance of setting up the IVA, with the
rest added to the arrangement.
All the insolvency practitioners we work with
charge no upfront fees. Their fees are met from the payments to the
IVA, which means no scrabbling around to pay fees when you can least
afford it. This approach also means that the Insolvency Practitioners
we work with will only proceed with setting up an IVA for you if they
are confident that your creditors will accept it. |
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