Many people think that having an IVA means you lose all of the assets you own, that Insolvency Practitioners ‘strip the house’ and ‘sell everything off in front of the neighbours’. In fact, this is very far from the truth about IVAs, but the fear of being left in the street sitting on your last remaining chair so strong that many people who need financial help don’t investigate IVA as a debt management tool.
The truth is this – IVAs can give you a great deal of flexibility about how to best use your assets to help you get out of debt. Most assets that an IP look at are considered luxury items and well outside what you need for a good comfortable standard of living. The following are a few that could be assessed by your Insolvency Practitioner for their potential value:
Where money is transferred between different accounts, for example savings accounts (eg regular or ISAs), investments (such as stocks, shares and market funds), insurance policies or pensions, you IP will want to look at these first as they are the easiest to manage. Your IP will usually ask you to stop paying into all of these, including your pension.
Transportation and recreational assets
Caravans, boat, car trailer or leisure vehicle – if you own any of these outright and they are of reasonable value your IP will ask for them to be sold. This includes your car if you are driving an expensive model, and a less expensive model will be deemed to be more suitable for the time being. An exception to this is a business vehicle.
But what is classed as expensive? A motorhome worth £20,000 would be, whereas a caravan worth £500 would not. Likewise an everyday car worth around £3,000 would probably be ok, but if it was worth £10,000 its sale would almost certainly be requested.
If you have valuable jewelry besides your engagement or wedding rings, antiques artworks, even valuable animals (such as alpacas or horses) if they are not part of a business, all will be assessed for their value and possibly sold.
What is excluded?
Anything that could be considered necessary for you to use on a daily basis such as:
- Furniture, fixtures and fittings
- Cooking equipment and white goods e.g. washing machines and dishwashers
- Televisions, computers and recording equipment
- Items for the care and upbringing of children in your household, including toys
- Medical aids or medical equipment
- Books or other items required for the education or training of you or any member of your household (not exceeding £1000)
- Implements, tools of trade, books or other equipment needed in the practice of a household member’s profession, trade or business, not exceeding £1,000
Asset investigation – what is it and why does it sometimes happen?
The past movement of assets is of interest to an IP, in some cases up to five years in the past, because it’s important that all assets have been sold for a fair price and not to dispose of them to avoid paying creditors. An IP is legally obliged to look at this.
For example, in the run up to an IVA you cannot give your share of your matrimonial home to your spouse, or dispose of large sums of cash into a pension or to your children. These are considered transactions ‘under value’, could be viewed as fraudulent and an IP can apply to the courts to revoke the sale.