How do I find the best IVA company for me?
The Insolvency Act states that an IVA can only be proposed and administered through the services of a licensed Insolvency Practitioner, otherwise known as an IP.
There are many IPs throughout the country, each following their own interpretation of the IVA protocol, the name given to the predetermined structure upon which most IVA’s are based.
Making the right choice
If you think an IVA is the right debt solution for you, then do some research on Insolvency Practitioners also known as debt management companies. This will help you make the right decision when choosing an IP to help you with your IVA proposal and financial situation.
Your Local IP
Some people are happy to contact a local Insolvency practitioner for help which can be a quick way of getting the ball rolling, but this direct approach can be problematic.
Firstly, your local IP might not concentrate their practice on the IVA sector, meaning they will be less familiar with the IVA process than those IPs that work solely with IVAs.
And it’s partly for these reasons that most people prefer to employ the services of a recommended IP, usually provided through an intermediary that can give them advice and financial services.
Intermediaries
By far the most common way of finding an IP is via an intermediary.
An intermediary is an individual or a company that introduce you to an IP they’ve had dealings with, in the past, like a sort of personal recommendation but on a commercial basis.
Using an intermediary is generally a good idea but, as with most things, some are better than others and some also charge a large fee for their services. So make sure you only use a ‘Not For Profit’ organisation or debt charities to be on the safe side. Do some checks before you start.
Financial Conduct Authority
It is a legal requirement for all individuals or companies, giving professional debt advice to the general public anywhere in the United Kingdom, to be authorised by the Financial Conduct Authority (FCA).
An authorisation is only given by the FCA after rigorous checks have been made.
Anyone can access the public records to verify the credentials of the intermediary by visiting the FCA website at www.fca.org.uk/firms/systems-reporting/consumer-credit-register
Checking the credentials of an intermediary will safeguard you from rogue traders and receiving bad advice.
IVA companies
If an IVA is the best debt solution for you, you’ll need an insolvency practitioner (IP) to manage the process for you. An IP may work independently or they may be part of a company that offers IVAs alongside other debt solutions.
An IVA is a form of insolvency. It’s a legally binding arrangement between you and your creditors, where they agree to either 60 or 72 affordable monthly payments or a lump sum settlement. We’d recommend that you get free, impartial debt advice before considering an IVA.
What does an insolvency practitioner do?
Only an insolvency practitioner (IP) can assist you with an IVA. The IP has several different roles to fulfil during your IVA.
They will first act as an advisor to you and help you finalise the terms of your IVA.
Once you decide to proceed with an IVA the IP becomes your Nominee. At this stage, they have legal duties to fulfil and need to report to your creditors on the viability of your IVA. The Nominee must remain impartial and can’t be influenced by either you or your creditors.
Once your IVA has been approved, the IP becomes the Supervisor of your IVA. Their role includes reviewing your IVA at least once a year, collecting and passing on your payments and ensuring you stick to the terms of the IVA.
Usually, your IP will act as both the Nominee and Supervisor, so you’ll be dealing with the same organisation throughout your IVA.
How do I choose an insolvency practitioner?
Regardless of who sets up your IVA for you, there will be costs involved. The fees involved with setting up and running an IVA might vary between companies, so it’s worth comparing a few first before going ahead with one.
Is an IVA right for me?
Only some people can qualify for an Individual Voluntary arrangement (IVA). At least 75% of your debts need to be included in the Agreement, and the relevant creditors must agree to it. Some debts can’t be included, such as student loans, fines and child support. If you live in Scotland you can’t get an IVA, but you may be able to get a Protected Trust Deed, which is similar.
To set up an individual voluntary arrangement, you’ll need to pay a licensed insolvency practitioner (usually a qualified lawyer or accountant). Their fees can be around £5,000 – but some practitioners will include this in the Agreement.
Note that there are other ways to deal with debt, including Debt Relief Orders and bankruptcy. If you need support with repaying your debts, make sure to speak to a free, independent debt adviser.
How does an IVA work and how will it affect my life?
An IVA usually runs for 5-6 years, although it’ll be extended if you miss payments. During this time, you’ll need to stick to the rules in the Agreement, and you’ll have limited control over your money. You can expect an IVA to impact your:
- Spending. You must keep to a budget during your IVA, and any bonuses or additional income must go towards your debts and your affordable monthly payment.
- Borrowing. You’ll only be allowed to borrow up to £500 during your IVA. If you need to borrow more, you’ll have to get approval from your insolvency practitioner. Also, you may find it difficult to get approved for credit.
- Possessions. It’s possible you’ll have to sell valuable items to repay your debts and return things you’re still paying off. An exception might be your car if you need it for work – although, if it’s an expensive car, you may need to trade it in for a cheaper version.
- Savings. You’ll usually have to contribute any savings towards your debts. Also, if you come into a lot of money during your IVA (e.g. redundancy pay or an inheritance), you may have to pay the full amount you owed before setting up the Agreement.
- Job. Your employment could be affected, although this is unlikely unless you’re an accountant, lawyer or similar.
- Business. Companies can check if someone’s on the Insolvency Register before trading with them – so, if you’re self-employed, an IVA may damage your reputation and ability to do business.
Would you like to discuss your debt solution options with us?
IVA Advice is a registered Insolvency Practitioner (IP), we support our clients to manage their debts and repay creditors. From the initial debt advice to drafting an IVA proposal and securing a legally binding agreement, we can help you manage your obligations.
Our friendly team is available to discuss various debt solutions and share information on how an IVA affects your finances. Please feel free to contact our registered office today, and we’ll help you manage your creditors and relieve the weight of debt that’s holding you back.