Individual voluntary arrangements – frequently asked questions

To help you get to grips with everything you need to know about individual voluntary arrangements (IVAs), we’ve provided answers to the most commonly asked questions. If you’d like any further information about IVAs, please get in touch and we’ll be happy to help.

Why am I still receiving letters from my creditors?

Once your IVA is accepted, creditors aren’t allowed to contact you for payments covered by the arrangement. Despite this, it’s not unusual to continue to receive some contact from your creditors. There are a number of reasons for this:

It may take time for creditors to update their records

At the start of an IVA, you may continue to receive letters, emails and calls from your creditors while they update their systems. It can sometimes take a couple of months for contact to stop in line with the terms and conditions of your IVA. If you speak to a creditor, ask them to check the insolvency register. This will confirm that your IVA has started.

If you are contacted by a creditor not listed on your IVA proposal, tell us as soon as possible. We’ll let them know how they can make a claim on your IVA.

Please send any emails and letters chasing you for payment to:

[email protected]

Creditors have to continue providing you with certain information

Even though you have an IVA, creditors still need to send you certain information e.g. an annual statement. Keep these for your own records.

Creditors will also let you know if they pass your debts onto another company for collection. This is nothing to worry about. But it is important that you let us know, so that we can start making payments to the new company. Send any written contact you get about your debts being passed onto another company to:

[email protected]

I’ve received a letter from a creditor saying they’re adding interest to my debt. I thought this would be frozen.

Sometimes statements show the interest and charges that would be added to your debt if there wasn’t an IVA in place. Don’t worry – if your IVA has been accepted and you’re making the agreed payments, any interest and charges will be written off once you successfully complete the IVA. The only time creditors may reapply interest is if the IVA fails.

I’ve been asked for proof of income. Why? And what should I do?

If you’re working, we’ll ask for wage slips/proof of income every six months so that we can check if your earnings have increased and, if they have, whether you owe anything extra into your IVA.

You can keep the first 10% over the amount listed as your usual wage. Anything extra needs to be split 50/50 between you and your IVA.

Example

If you usually earn £1,000 per month, we would expect your income to be £6,000 over a six-month period. If you did overtime and actually earned £7,000, the first £600 of the additional money would be yours to keep. Then the £400 left over would be split between you and your IVA. This would mean an extra £200 would need to be paid into your IVA, with you keeping £800 of the extra £1,000 that you earned in that six-month period.

Whenever a review is due, you’ll receive automatic reminders with a link to upload any proof of income you haven’t already sent. But you don’t have to wait until a review is due. You can provide proof of income at any time by email:

[email protected]

Or post:

Financial Wellness Group

Think Park

Mosley Road

Trafford Park

Manchester

M17 1FQ

Once we have all of the wage slips we need for a review period, we’ll let you know whether you owe any extra money. If you can prove that you’ve had to cover additional costs during that same period (work-related or not), it’s sometimes possible to offset those costs against the extra money you owe. If you’ve had to cover additional costs, please get in touch.

I’m struggling to make payments due to a change in my circumstances, what should I do?

We understand that, during the course of your IVA, things can change. If this happens, please get in touch.

For short term changes, we can help by:

• granting a payment break, if it will improve the chances of the IVA succeeding long term (as long as evidence of the change can be provided)
• offering creditors a part payment, providing you agree to pay the rest later

If your circumstances have changed long term, we can still help by:

• reassessing your income and expenditure to work out what you can now afford to pay. We’re able to make a small, permanent change to your payment if necessary
• if you need a bigger reduction to your payments, we would have to try and get permission from your creditors

If you don’t make your full payments without getting agreement first, your IVA could fail. This could lead to creditors contacting you again, interest and charges being added to your debt, and even bankruptcy. To avoid this, it’s really important that you speak to a relationship manager as soon as you realise there’s a problem and before you miss a payment. They’ll talk you through your options and do everything they can to make sure your IVA succeeds.

It may be that your circumstances have changed so much that another type of debt solution is now better for you. If this is the case, we can put you in touch with someone qualified to help.

Will I get regular updates about my IVA?

We’ll send you a statement every three months letting you know if there is any information you need to send us and whether your payments are up to date.

When we complete your six-month reviews, we’ll let you know if you need to pay any additional money into your IVA.

Each year, shortly after the anniversary of your arrangement, we’ll send an annual report to both you and your creditors, showing the progress of your IVA.

My contact details have changed. What do I need to do?

You can email us your new contact details:

[email protected]

It’s very important that your contact details are up to date. If your email address, contact number or address have changed, please let us know as soon as possible so that you do not miss out on updates about your IVA.

What do I need to do for my annual review?

Before an annual review, we’ll send you a copy of your last income and expenditure form for you to review and update.

Once you’ve done this, you should send us:

• a signed copy of your income and expenditure form – with any changes you want to make
• evidence of those changes – e.g. bank statements/rent letters/utility bills
• proof of income – we need to see your most recent wage slip/pension statement/benefits letter (including any tax credit assessment letters that you have received). You only need to send wage slips if you haven’t already sent them for your six-month reviews.

We can only make any changes once we have all of this evidence. If there’s anything missing, we’ll tell you what documents we need.

I‘ve just received an annual report. What is it?

Your annual report is a written summary of how your IVA has gone over the last twelve months. A copy of this must be sent to you and your creditors. It includes how much you’ve paid into your IVA and how much your creditors have received so far. It also includes the outcome of your income and expenditure review and your six-month income reviews. If you’ve been unable to make payments as expected this will also be included.

What do I need to do to complete my IVA?

In order to complete your IVA you must:

• make all the required payments (including any additional money owed)
• pay in any compensation from mis-sold financial products (if applicable)
• meet the requirements of the equity clause in your proposal (only applies if you’re a homeowner)
• provide proof of income and expenditure (we’ll let you know when we need this information).

When this has all been done, we’ll send you and your creditors a final report. This confirms that you’ve completed the IVA successfully and asks creditors to update your credit file. You’ll receive a certificate of completion for your records.

How do I make sure my credit file is correct when my IVA finishes?

Your IVA is registered on your credit file for six years from the date it is accepted (not the date it finishes). Until this date, it will appear on any credit checks that are carried out and may affect your chances of being accepted for certain financial products and contracts.

When we send out the final report to creditors, we ask them to make sure they update your credit file. We can’t update your credit file – it must be done by your creditors. You can check this has been done by asking one of the credit reference agencies for a copy of your file.

You can get more information about credit reference agencies here:

ico.org.uk/media/for-the-public/documents/1282/credit-explained-dp-guidance.pdf

When will my IVA finish?

Your IVA proposal shows the number of payments you’re expected to make and how long the arrangement will last.

You may find you need to pay additional money into your IVA due to missed payments, extra income you’ve received, or assets you own. You can usually make any extra payments required after you’ve finished making the original payments outlined in your proposal.

If you’re a homeowner and your property was included in your IVA, you may need to remortgage. If you’re unable to remortgage, you may need to make additional payments into your IVA for up to 12 months.

I’m a homeowner. How will this affect my IVA?

Your proposal will confirm if the property is included and the amount of equity there was at the start of the arrangement. It will also show what needs to happen in relation to the property before the IVA can complete.

If the proposal states you may need to release equity from your property, we’ll complete a valuation of your home six months before the end of your IVA. We’ll also ask you to provide a mortgage statement so we can work out if you need to try to remortgage.

To do this, we’ll calculate 85% of the value of your home and deduct anything you owe on your mortgage. If the amount left is less than £5,000, you don’t need to do anything and your IVA will finish at the end of the agreed term. If it is more than £5,000, you’ll need to try to remortgage. If you’re unable to remortgage, your IVA will be extended by up to 12 months.

How do I make my council tax payments while I’m on an IVA?

If your council tax bill is in your name only or you have a joint IVA with everyone else named on the bill, anything you have left to pay for the current year and any previous arrears will be added to your arrangement.

Council tax payments that you would otherwise have made direct to the council will be paid into your IVA along with your normal disposable income until the April after your IVA starts.

At this point (when your new bill is issued) you will start paying direct to the council again. Your IVA payments will be reduced to your disposable income to allow you to do this.

The council will receive a percentage of their debt back (towards the current and previous bills) from the IVA in the same way that any of your other creditors get paid.

or

If you’re living with a partner or another adult who isn’t on the IVA, we’ll add your council tax debt to your list of creditors for £1 for information purposes. The household then continues to pay the council directly. If your household is unable to pay the council tax, your share of the bill owing up to the April after your IVA starts would be included as an IVA debt. The other person named on the bill would need to come to an arrangement with the council separately.