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If you’re looking for an effective debt relief solution, an Individual Voluntary Arrangement is one of the more popular options. It enables you to pay back your debts without dealing with your creditors, and once you complete your IVA, you receive a certificate of completion.
While an IVA stays on your file for six years from the day it starts, you’ll be able to rebuild your credit rating and enjoy a more secure financial future. There’s no doubt that an IVA is a better alternative than bankruptcy, but many of our clients are unsure what they can and can’t do once they enter into one.
In this short guide, we’ll explore how an IVA might impact travel and emigration.
What Are The General Rules Surrounding Travel With an Individual Voluntary Arrangement (IVA)?
There are no rules to say that you cannot travel during your IVA payments, but there are strict regulations on how much you can spend in general. For example, if you receive a lump sum from an inheritance or a lottery ticket, you’re expected to put that extra money into your IVA.
While your insolvency practitioner won’t stipulate that you must remain in the UK, if you suddenly have the money to go on an expensive holiday, you’ll be breaching your arrangement, which can result in the IVA stopping.
How Can I Go On Holiday?
When you begin your IVA payments, your insolvency practitioner will leave an amount for you to live on each month. For most people, this amount covers their food, transport and other necessary expenses, but if you’re able to save a bit extra, you can use it to pay for a holiday.
If you can’t save enough to go on the holiday you’d planned for; there are still ways you can enjoy some leisure time without putting your IVA in jeopardy.
Even if it’s a weekend getaway or a staycation, you can pay off your debts and look forward to that dream vacation in the future.
Will Moving Abroad Affect My IVA Payments?
While the rules surrounding going on holiday are pretty straightforward, moving abroad requires more planning. You can move abroad with an IVA and continue to make your monthly contribution until the outstanding amount is settled.
However, it’s essential to think about how the country you’re moving to might impact your payments. For example, relocating to somewhere like Canada can mean you’ll pay more for housing. Even European countries such as Denmark, Switzerland, and parts of Austria have much higher living costs than the UK.
Your insolvency practitioner considers your personal circumstances when entering into a legally binding agreement. Still, it’s unlikely that your cost of living allowance will be increased if you move abroad.
What Happens If I Can’t Meet My Monthly Payments?
In some cases, your IVA provider might offer a payment break if you’re struggling to meet your monthly obligations, but this is usually when an event out of your control happens, such as redundancy.
Choosing to move abroad doesn’t mean your creditors will agree to let you take a break. If you don’t keep up with the repayment plan, and should your IVA fail, your creditors will be able to chase you for the total amount.
Nobody wants the IVA to fail (including your creditors), but the best solution is to continue with your payments and try to reduce your living expenses where you can.
Why Can’t I Let My IVA Fail?
Some people might think that if they’re moving abroad, it’s OK to let their IVA fail because the debt is back in the UK, but not only does this show that you’re irresponsible, those debts can still catch up with you.
Also, if you want to return to the UK in the future, you’ll still have to pay off your debts and any interest rates they incur. While some people can technically run away from their debts, it’s always advisable to do what you can to pay off everything you owe.
Filing For Bankruptcy
When you move abroad, your debts still exist, and if you can’t keep up with your IVA payment terms, you can file for bankruptcy. However, it’s best to avoid doing this if possible, because again, if you move back to the UK, it can impact your employment opportunities.
If the country you live in has a relationship with the UK, you could also be recognised as bankrupt in that country, which is why we recommend you seek alternative solutions.
How to Let Your Insolvency Practitioner Know You’re Planning to Leave The Country
It would be best if you always kept your insolvency practitioner in the loop regarding your plans, including going on holiday. The IVA provider will need your contact details so they can stay in touch with you and your creditors regarding your monthly payments.
It’s relatively easy to do, and a simple phone call should be fine. One thing to be aware of is selling or renting your home. Your creditors are entitled to money, and if you decide to sell, you can contribute a lump sum to finish the IVA quickly.
Renting your home is a different situation because you’ll need some income to pay rent in your new country. By being completely honest with your insolvency practitioner, you can cover yourself legally and ensure you have enough to live off.
Your creditors will have to agree to any new terms, but a good IVA provider will be able to negotiate on your behalf.
Would You Like Free Debt Relief Advice?
As one of the UK’s most dedicated debt advice agencies, the team here at UpStart would be happy to offer a free consultation and talk you through how Individual Voluntary Arrangements work. We can also connect you to registered insolvency practitioners and help you understand whether you might need to release some equity.
Whether you’re dealing with one angry creditor or multiple debts, we’ll help you get back on track. Please don’t hesitate to contact us today for your free consultation with a licensed insolvency practitioner.