Some interesting facts about IVAs
- IVAs are intended to protect assets e.g. properties, businesses, etc. A property in negative equity is not an asset and is not lost in bankruptcy.
- People living in rented accommodation and holding down everyday jobs have little use for an IVA.
- IVA companies charge an average of £6500 to set up an arrangement, but this can rise to £12,000 – £14,000 in some cases.
- The above fees are added to the IVA upfront, thus effectively removing the original benefit of having part of the debt eliminated ‘Using Government Legislation’.
- The first 20 payments of any IVA go directly to the company administering the IVA. Not a penny goes to the creditors.
- There is little difference between an IVA and a Bankruptcy in terms of what it does to your credit rating.
- On the Insolvency Register, IVAs and Bankruptcies are listed together and are viewed by the business world as one and the same.
- However, people are often released from Bankruptcy after 6 – 8 months, whereas an IVA ties you in for 5 – 6 years. If you own a property, the minimum term for an IVA is six years.
- The longest period you can remain in bankruptcy is 12 months.
- Which begs the question: why remain in an IVA for 5 – 6 years when you can be in and out of bankruptcy in a maximum of 12 months?
Perhaps the most significant point when considering whether to leave an IVA is that your financial circumstances are reassessed. It is often the case that people’s financial positions have worsened since entering the IVA and this is recognised by the court. The end result is that there is often no monthly payment – or a greatly reduced one – following bankruptcy.
Please remember, you have the right to leave an IVA just as you had the right to enter into it in the first place!
Key Points of Bankruptcy
- It is a civil process, much the same as a rent dispute or a divorce
- At no stage of the process does anybody visit your home
- You do not lose any household furniture or personal items
- You do not see a Judge on the day you go to court
- Your name no longer appears in local newspapers
- The Courts treat you fairly and have no interest in making money out of you
- You are allowed to keep vehicles within reason (£1,000 is the threshold)
- You are allowed to have a bank account like everyone else