Self-employed IVAs: Frequently Asked Questions

Written by Chelsea Potter on 1 September 2016

A self-employed IVA is a debt solution tailored for the self-employed. If you’re struggling with your finances and run your own business or work for yourself, then this might be an option for you. This week’s blog post looks at what a self-employed IVA is and answers the most common questions we get asked about how this debt solution works.

Can I keep trading with a self-employed IVA?

You can keep trading as long as your business is profitable. The nature of a self-employed IVA is to allow you to pay back your debts while allowing you to keep your business running.

What if I owe money to my suppliers?

When you talk to a debt adviser they will help you to draw up a business cash flow and a personal income and expenditure to work out what you can afford to pay back towards your debts each month. This will help form the basis of your IVA proposal. In your income and expenditure you will account for ongoing supplier payments so going forward these will be added to your cash flow so you won’t miss any further payments.

In regards to debts with suppliers, a self-employed IVA has a degree of flexibility so you can prioritise payments to suppliers who you need to keep trading with. We can help you negotiate an agreement with your suppliers if you prefer.

How long will my self-employed IVA last?

Your IVA will normally last 5 years, however it could be extended by a further 12 months if you have equity in your property that you cannot release. This will be agreed at the start of your IVA however and will be dependent on individual circumstances.

Can I have a business bank account?

If you have missed several payments to your creditors, it is likely you will have a poor credit rating. This will impact your chances of opening a business bank account. If you already have a business bank account, providing you don’t owe your bank money or have an overdraft that you can’t afford to repay, there should be no problem with keeping that account. If you do owe money to your bank however, or have an overdraft, we would recommend you add these debts to your IVA.

Could a self-employed IVA affect my business?

Providing you can afford to keep trading then an IVA shouldn’t affect your business. It is recommended you check your business contracts however as there may be a stipulation in your contract in the event one of the parties become insolvent.

What debts can be included in a self-employed IVA?

A self-employed IVA can include most unsecured debts, for example:

  • Overdrafts/bank loans and credit cards
  • Store cards
  • Council tax arrears
  • Payday loans
  • CCJs
  • Rent arrears
  • Utility arrears

Debts that cannot usually be included in an IVA include:

  • Mortgages
  • Secured loans
  • Hire purchase agreements
  • Court fines e.g speeding tickets
  • Student loans
  • Child maintenance arrears

Will I need to pay tax alongside my IVA?

You will need to continue to pay tax as normal alongside your IVA. However any arrears or any tax owed up to the end of the tax year when your IVA was agreed can be included in your IVA.

Who qualifies for a self-employed IVA?

Self-employed IVAs are available to residents of England, Wales and Northern Ireland – they are not available for people in Scotland – who owe £7,000 or more in unsecured debts. You must also be self-employed and able to make a minimum repayment of £50 each month.

Will I be able to trade from leased premises if I enter a self-employed IVA?

This will depend on the contract. It is a possibility but some landlords may have put a term in your agreement saying you can’t trade on their premises if you are insolvent. Always check your contract when considering an IVA. If you are in arrears with your landlord this may cause an issue with you continuing to use the premises – however as with suppliers we may be able to negotiate an agreement in which you pay back any arrears as well as paying the rent for future use.

What happens if I can’t afford my self-employed IVA payments?

When you discuss your budget with your adviser, you will need to consider seasonal incomes and fluctuations. In a self-employed IVA, payments can be adapted on a month by month basis based on your forecasted business cash flow. This will be considered before you enter into an IVA so you can accommodate for difference in income beforehand. However if you go ahead with your IVA and still find yourself struggling you need to talk to your Supervisor as soon as possible. They might be able to arrange a payment break of up to six months or a reduction in payments of 15%. Should your income change talk to your Supervisor and they will discuss your options with you.

If you would like to know more about self-employed IVA’s, our website PayPlanBespoke.com contains further information and advice. If you are struggling to manage your finances and want to talk to an adviser you can contact us on 0800 280 2816.


Filed under Debt Facts

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

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