Do I Have to Declare That I Have an IVA?
When someone takes on an individual voluntary arrangement (IVA), they have to weigh up the pros and cons of their decision. In some cases, an IVA is the best way to relieve yourself of debt and look forward to a better financial future.
One of the most significant issues people have with evaluating whether an individual voluntary arrangement is right for them is understanding how it might impact their life.
If you’re wondering if you have to declare an IVA for financial, employment and loan purposes, then we have everything you need to know.
Does an IVA Appear on My Credit File?
As soon as you enter into an individual voluntary arrangement, it will appear on your credit file. That means that credit agencies, banks and lenders can look up your information, and they’ll see the IVA when they run credit checks.
Your credit report influences whether you’re a viable candidate to receive a loan or any other financing, and most creditors won’t lend to you if you have an IVA.
You’ll also need to ask your insolvency practitioner if you want to borrow money that exceeds the sum of £500, so most people find that they’ll fail a credit check while the arrangement is active.
Do I Have to Declare My Individual Voluntary Arrangement When I Get a Job?
In most cases, having an IVA won’t impact you getting or keeping a job, but there are some exceptions to the rule. If you work for a financial institution or are in a position of power, then some people might find they struggle to get a job in certain areas.
You should be fine unless you choose to work in:
- Financial Services
- Legal Professions
- Accountancy
- Property Conveyancing
If you’re unsure, it’s always best to explain the situation to your employer and seek further debt advice from our friendly team.
Does IVA Count as Income?
It can be pretty tricky to understand whether your IVA counts as income, but the short answer is no, it doesn’t. You’re consolidating your existing debts and paying them off over an agreed period, so in most cases, your individual voluntary arrangement won’t count as income.
You will, however, have to report any changes to your financial circumstances. For example, you might receive a bonus at work or get a promotion. In both cases, you’ll need to let your insolvency practitioner know about the spare income because it will impact your monthly payments.
It’s the same if you withdraw money from your pension fund, release some equity or receive any other additional income.
How Does an IVA Affect My Tax Return?
Both the debt relief company and the individual who takes an IVA have to adhere to strict rules and regulations to ensure the whole process is fair. When you have an IVA, a part of your responsibilities is to manage your taxes and check the correct code when you file them.
Every tax code tells employers how much they need to take from their employee’s paycheck, or if you’re self-employed, they define how much you’ll pay when you file a yearly self-assessment.
If you use the wrong tax code, then it can impact your individual voluntary arrangement. Your provider is responsible for ensuring your creditors receive their money, so you could breach your agreement when you fail to use the correct tax code.
Your Provider Needs to Ensure They Pay Your Creditors
An IVA is so you can pay back your creditors, and if you’re receiving extra income, you’ll need to declare it. The wrong tax code might mean you end up paying less money back, and while it might seem tempting to withhold information, it can end your agreement.
You’re Responsible For Your Tax Code
While some people believe that their employers are solely responsible for their tax code, that isn’t true. Most IVA’s require you to submit your payslips as proof of income, avoiding discrepancies further down the line.
Your Financial Situation Might Mean You Pay More or Less
If your financial circumstances change, your IVA agreement might have new terms. It’s important to remember that an IVA is a legally binding agreement, so you must let your provider know if you know you’ll miss payments.
In some cases, insolvency practitioners might be able to arrange a payment break to help you get back on your feet, and most will work with you to develop a new debt management plan.
Ultimately, no creditor wants to risk losing money, so you’ll be able to make payment arrangements, but only if your circumstances are valid.
As long as you can prove that there are issues with your bank account, your insolvency service should offer to support you – especially if your outstanding payments are of significant value.
Would You Like Some Help From An Expert Insolvency Practitioner?
At IVA Advice, we specialise in setting up IVA’s and act as the middle man between debtors and creditors. Our experts will work hard with you to find the best solution to suit your needs and keep you fully informed throughout the process.
Individual voluntary arrangements can be tricky to manage, but we’re registered by the Financial Conduct Authority and will help you navigate the individual insolvency register.
Contact Us For Debt Advice
We understand that the weight of the world is on your shoulders when you owe money, but if you don’t have a lump sum to pay off your debts, we can offer you guidance and support. Please feel free to contact our registered office, and we’ll get back to you ASAP.