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IVA Questions

Individual Voluntary Arrangement questions

Do you have a question about IVAs? Well, you’ve come to the right place!


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We’ve put together a list of frequently asked questions about IVAs and we hope your query can be answered here. If you think you need practical debt help then feel free to call us on 0800 316 1833 or click the “Get advice now” button so we can call you back.

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  1. Can I enter into an IVA?
  2. Will my IVA be accepted?
  3. How much does it cost?
  4. How long will an IVA last?
  5. Which debts can be included in an IVA?
  6. What happens if I can’t make the payments into my IVA?
  7. What happens if my financial situation improves during the IVA?
  8. What if I receive a windfall during my IVA?
  9. Will my partner be affected by my IVA?
  10. Who will find out about my IVA?
  11. What will happen to my pension?
  12. Can I arrange an IVA directly with my creditors?
  13. What happens if I have equity in my property?
  14. Can the creditors continue to chase me when I am in an IVA?
  15. What is an Interim Order?
  16. IVAs and Bank Accounts
  17. What should I do if a creditor contacts me?
  18. What is an Annual Review?
  19. What happens if I can’t keep up with my IVA payments?
  20. What happens if I earn additional income, such as overtime, during the IVA?
  21. What happens if my personal details change?
  22. What happens if my IVA fails?
  23. Will I have to pay my Council Tax arrears if I’m in an IVA?
  24. Does being in an IVA affect claims for PPI?
  25. How will an IVA affect my credit rating?
  26. What happens once I’ve completed my IVA?
  27. What is the ‘Equity clause’ in my IVA and how will it affect me?
  28. What if I’m made redundant during the IVA?
  29. What happens if I receive a windfall or inheritance during the IVA?

  1. Can I enter into an IVA?

An IVA may be available to someone living in England, Wales or Northern Ireland who is experiencing difficulty in meeting contractual payments to their unsecured creditors. An IVA would usually last for 5 years and is based on the monthly surplus available after paying for essential living costs.

For those who have no surplus income but have a lump sum available to offer to creditors, an IVA can be proposed on the payment of one lump sum and would usually be concluded in a year or less. This is known as a Full and Final IVA. Typically, unsecured debts should total at least £7,000 owed to at least two creditors.

You can discuss which debt solution is best for you by contacting PayPlan.

  1. Will my IVA be accepted?

Your creditors will have the chance to accept or reject your IVA. Whether or not your IVA is accepted depends on how your creditors vote and what percentage of your total debt they are owed. For an IVA to be approved, creditors representing at least 75% in value of the creditors who vote must agree to it. If this is achieved, your IVA is accepted and all unsecured creditors will be deemed as having agreed to your IVA, even if they reject it or do not vote at all.

Your creditors judge each application for an IVA on its own merits when they are considering their voting stance. They may look at your: value of assets, level of debt, monthly repayment offer, any lump sum repayment offer, the expected return to all creditors concerned and the reason for the debt.

Creditors will expect a high level of commitment from you during the term of an IVA. Socialising costs, holidays, gifts, beauty treatments or any form of savings are classed as luxury expenses and are typically not accepted by creditors as essential areas of expenditure. You will need to put your IVA above luxury expenses, as this is what will get you out of debt.

Creditors also have their own criteria, which they expect an IVA proposal to meet if they are to vote in favour. PayPlan Partnership Limited deals with the main banks and credit card companies on a daily basis and makes every effort to tailor your IVA proposal to meet the needs of the creditors involved.

  1. How much does an IVA cost?

Unlike some companies that provide IVAs, PayPlan Partnership’s Insolvency Practitioners do not charge upfront arrangement or assessment fees. Furthermore, you only start paying once your arrangement is approved by you and your creditors so, if for any reason creditors reject your proposals or you choose to withdraw your offer, you will not pay anything.

Your income and expenditure will be assessed, to work out what your monthly contributions into the arrangement should be. This will show your creditors what you can afford, giving your arrangement the best possible chance of success.

The monthly payments or lump sum payment that you make into your arrangement will cover the payments to your creditors as well as the fees and costs involved in an IVA. These fees and costs will not affect your monthly payments, as by agreeing to the terms of the IVA your creditors accept that we will take a proportion to cover the fees and costs for our work for the duration of your IVA. This means that the payments remain affordable for you. Your IVA proposal will include full details of the estimated fees and costs.

  1. How long will an IVA last?

Normally, IVA payments are usually made over a period of 60 months (5 years). However, an IVA may be extended to six years if you have equity in a property.  
Alternatively, you may be in a position to make a Full and Final offer to your creditors. This type of IVA would usually be for a maximum period of 12 months.

Defaulting on agreed payments could result in the failure of the IVA and the possibility of bankruptcy. Rest assured we would work with you to find a positive solution to successfully conclude your IVA.

  1. Which debts can be included in an IVA?

The following debts can be included in an IVA:

  • Bank account debts
  • Finance company loans
  • Credit or store cards
  • Outstanding Tax and VAT debts
  • Loans from friends and family
  • Outstanding Hire Purchase shortfall payments on goods that you no longer have (typically repossessions or write-offs)

You must keep up full contractual payments to your secured debts and other priority debts (see below). An allowance will be made in your expenditure schedule for these.

Debts that are not normally included in an IVA are:

  • Mortgages and loans secured on your property
  • Hire Purchase Agreements (except shortfalls)
  • Magistrates Court Fines, speeding tickets etc.
  • Debts incurred through fraudulent activity
  • Maintenance/CSA Arrears
  • Arrears on a rental property (however, you may be able to include outstanding rent on a previous property)
  1. What happens if I can’t make the payments into my IVA?

It’s important to keep up with payments as missed payments can result in the failure of the IVA and it is possible, but rare, that failure may lead to bankruptcy.

When considering an IVA, it’s necessary to be able to commit to the payments offered for the duration of the IVA – typically 60 months (5 years). However, there could be any number of reasons to cause a reduction in income, which then affects your ability to keep up payments. Examples include illness, redundancy, relationship breakdown and bereavement.

Therefore, during the term of the IVA, it’s vital that you speak to your IVA administrator as soon as you think you may have a problem making a payment. There may be options open to you, such as a payment break or reducing your monthly payments, but communication with your IVA administrator is absolutely necessary to explore these.

  1. What happens if my financial situation improves during the IVA?

You will complete an annual income and expenditure review with your IVA administrator to ensure your IVA payments remain affordable. 

You should keep your IVA administrator informed of any changes during your IVA. If there is an increase in your surplus income, your Supervisor may request up to 50% of the additional surplus to be added to your monthly payments.

  1. What if I receive a windfall during my IVA?

For those entering into a 5 year IVA repayment plan, your IVA will include a ‘windfall’ clause. Any windfalls, including lottery wins, gifts or inheritance have to be declared to the Supervisor and paid into the IVA for the benefit of the creditors.

  1. Will my partner be affected by my IVA?

An IVA (Individual Voluntary Arrangement) is as the name suggests, individual to you. However if any of the debts were taken out in joint names, the other party will also be fully liable for that whole debt.

Your own liability for the joint debt will be taken care of by your IVA; however, the creditor can also pursue the other party for the full outstanding amount. If you are jointly liable with your partner who is not entering into an IVA, an allowance will be made in your Income and Expenditure for them to repay the debt.

  1. Who will find out about my IVA?

Unlike bankruptcy, which will be published in the London Gazette and sometimes in your local paper, IVAs are not published. This is often a reason why people favour IVAs over bankruptcy as it is kept more private.

Your IVA will however be listed on the Insolvency Register, held by the Insolvency Service. Anyone can access the Insolvency Register via the internet. After your IVA is complete, the Insolvency Service will be notified and your IVA will be removed from the register, usually 3 months after completion.

  1. What will happen to my pension?

Your state pension won’t be affected by entering into an IVA, however your personal pension payments may be.

You may only be allowed to make the minimum payments to a pension for the duration of the IVA. You would then be expected to increase your IVA payments by the amount of any saving.

If you are not able to comply with this and there is a very good reason for you to continue contributing more than the minimum payment into your pension, it may be possible for the Supervisor to negotiate with the creditors on your behalf to find a compromise.

  1. Can I arrange an IVA directly with my creditors?

You cannot arrange an IVA directly with your creditors. To be able to set up an IVA (which is regulated by the Insolvency Act 1986) you will need the services of a licensed Insolvency Practitioner (IP). The IP will also supervise your IVA throughout the duration of the Arrangement.

  1. What happens if I have equity in my property?

If you own or co-own a property with equity, you may be required to remortgage towards the end of the IVA to give your creditors an additional payment. If 85% of your equity is £5,000 or more, but you are unable to re-mortgage, the IVA will be extended by up to 1 year (12 monthly payments).

  1. Can the creditors continue to chase me when I am in an IVA?

Your creditors cannot chase you when you are in an IVA. Once an IVA has been approved, the creditors included in your IVA have no right to chase you for payments. However, they may still send you default notices and annual statements but these may be automated, so you don’t need to worry about them. 

To keep creditors at bay, it’s in your best interests to keep up with your IVA payments for the duration of your agreed term. If you are being chased for payment after the approval of your IVA you should contact your IVA administrator to let them know.

  1. What is an Interim Order?

An Interim Order prevents your creditors from taking or continuing any legal action against you. If you have any pending court action relating to your unsecured debts, your Insolvency Practitioner may apply for an Interim Order to stop this while the proposals for your IVA are being prepared.

  1. IVAs and Bank Accounts

Whilst your IVA proposals are being prepared, you may be asked to change bank accounts. This is because the banks have something called the “Right to Off-Set” which entitles them to remove money from your bank account to ‘off-set’ against unsecured borrowings you may have with a ‘linked’ account such as a personal loan and/or credit card.

With a number of large banks merging over the last 20 years, it can be confusing to know if companies are linked, so we have detailed the main ones and their subsidiaries here (Linked Creditors).

By opening a new basic bank account and using a company with whom you have no financial ties, you can ensure that your income will be safe.

If you already have an independent bank account, with no borrowings or overdraft facility, it should not be necessary to change.

Monzo provide online bank accounts which are suitable for anyone entering IVA. If your IVA is with PayPlan Partnership, your IVA case officer will be happy to discuss this option, as well as others, with you.

  1. What should I do if a creditor contacts me?

    If you choose PayPlan Partnership Limited to administer your IVA, it’s important that, before your IVA is approved, you forward any creditor mail you receive over to your PayPlan IVA Case Officer. This will help them confirm the creditor details required for your proposal.

    Once the IVA is approved, creditors included in your IVA are legally bound to stop chasing you for payment. All of the creditors listed within your proposal will be notified of the approval of the IVA and will update their records accordingly. Please note that it can take several weeks for contact to completely stop.

    For all letters chasing payment after a few weeks, contact your case officer via PayPlan Plus, letting them know which creditor has contacted you. You should keep a copy of all documents relating to IVA creditors for your records and email a copy to your IVA administrator.

    If you do receive contact, the action required will depend on the nature of the contact, most of which will be nothing to worry about. You may receive calls chasing up payments but you should let the caller know this is included in your IVA (if you declared this creditor in your arrangement).

    Letters you could receive include:

    • Attachment of Earnings Notice
    • Bankruptcy Notice
    • Charging Orders
    • Default Notice
    • Final Demand
    • Further Action Required
    • Legal Action Letter
    • Notice in Sums in Arrears
    • Notice of Assignment
    • Notice of Court Proceeding
    • Referral to a debt collection agency
    • Statutory Arrears Notice
    • Statutory Demand
    • Statement of Account
    • Warrants of Control

    When you enter an IVA, these communications should stop, apart from the Statement of Account, which creditors are required to send annually. Find out more about each of these letters on our website.

    If you are still being contacted by an unsecured creditor listed within your proposal several weeks after the IVA has been approved, you should contact your IVA administrator to let them know. It’s likely a quick call from them will resolve this.

    If you are being chased for payment by anyone whilst you are in an IVA and are struggling to pay, please let your IVA administrator know straight away to establish what options are available for you and what action should be taken.

  1. What is an Annual Review?

During your IVA you are required to provide proof of your income each year to allow your IVA administrator to conduct a review of your budget to see if payments are still affordable and if possible, increase payments into the IVA to increase the return to your creditors. This is your IVA annual review.

This review will take into account any increases in your expenditure and any changes in your circumstances not previously addressed. Typically, where your surplus income has increased, you would be asked to increase your payments to the IVA by 50% of the additional monthly surplus and you would keep the remaining 50%.

Your IVA administrator will also discuss the overall performance of the IVA over the previous 12 months and any matters that might be outstanding, agreeing what is required to allow your IVA to successfully continue.

Note: If you have entered a Full and Final IVA, this review is not required.

  1. What happens if I can’t keep up with my IVA payments?

IVAs are flexible and can accommodate times where you may be unable to pay.

You may be unable to pay for a number of reasons: 

  • Loss of job
  • Loss of benefit income
  • Partner/lodger/child no longer lives with you
  • Sickness
  • New baby
  • Unforeseen additional expenditure

This list is not exhaustive – a lot can happen during the 5 years (or 6 if you own a property) of the IVA and there will be many options available. The best thing you can do is contact your IVA administrator straight away to let them know why you are unable to pay.

They can then look at the terms of your IVA and the options available and work with you to find a solution.

If your IVA is with PayPlan Partnership Limited and your IVA reaches 3 months missed payments, a breach notice will be issued. It’s important that you get in touch with your IVA administrator during this time to explain why this has happened. A breach notice is a formal notice setting out a plan to fail the IVA if you fail to remedy the breach. You can remedy the breach by contacting your IVA administrator and working with them to agree on a solution.

  1. What happens if I earn additional income, such as overtime, during the IVA?

If you are employed and earn any additional income over and above the amount detailed in your Statement of Income & Expenditure form (listed within your IVA proposal), you must let your IVA administrator know. In PayPlan Partnership Limited’s case, this will be within 14 days of receiving any additional income.

Your IVA administrator can then calculate if you need to pay some of this additional income into your IVA to increase the return to your creditors.

Common types of additional income are things like commission, a bonus and overtime.

Rest assured that you’ll never have to pay in all of your additional income – you’ll always be able to keep more than half of it for yourself.

You can use the following example to help you calculate if any payment is due to the IVA from additional income:

  • Income listed in IVA proposal: £1500 per month (net)
  • Bonus received of £300 (net)
  • 10% of your normal pay is disregarded, so in this example, £150 is disregarded
  • This leaves £150 which would be split 50/50 between you and the IVA
  • Therefore £75 would be paid to the IVA, leaving £225 for you to keep

  1. What happens if my personal details change?

As IVAs are typically 5 or 6 years long, it’s inevitable that your circumstances will change during that time.

In order to ensure the IVA works with any changes you experience, it’s important to let your IVA administrator know when things change like:  

  • Selling your property – you should not consider selling your property before you have discussed your IVA administrator so they can let you know what this means for the IVA and you can make an informed decision.
  • Moving house – this will affect several areas of your expenditure and it’s vital that your IVA administrator has your current address on file.
  • Changing job – this will affect your income and expenses such as travel costs.
  • Changing your name – not likely to affect your payments but it’s important your IVA administrator has up to date information.
  • Changing your telephone number – your IVA administrator will often need to speak with you regarding your IVA so the correct contact details are vital.
  • Changing your email address – like your phone number, it’s important so your IVA administrator can stay in touch.
  • Partner/lodger/child moves in or out – this will affect several areas of your expenditure.

This list is not exhaustive and a lot can happen during the IVA, but with up to date information your IVA administrator can make sure the IVA is working as well as possible for you.

The best thing you can do is contact your IVA administrator straight away to let them know if your circumstances change, especially if this will impact your ability to pay.

  1. What happens if my IVA fails?

The majority of IVAs do reach a successful conclusion, however it is possible your IVA could fail. Below are some reasons why your IVA could fail:

  • Failing to remedy a breach as detailed in ‘What happens if I can’t keep up with my IVA payments’ above
  • Taking out further credit without your supervisor’s permission
  • Not disclosing all your assets in your original proposal

If you have breached your IVA agreement but still wish to continue your IVA, you should contact your IVA administrator as soon as possible to discuss your options. 

The main consequences of an IVA failing are:

  • Creditors are likely to start applying interest and charges to your debts again. They may even apply interest and charges from the date your IVA was originally accepted by your creditors. This could significantly increase the amount you owe.
  • Your creditors will start pursuing you to recover their debt. This could include applying to Court to secure their debt on your home, applying for an Attachment of Earnings Order where money is deducted from your wages to pay the creditor and even petitioning to make you bankrupt.
  • Your failed IVA will still stay on your credit file for six years, further impairing your credit rating.

Your IVA administrator will work with you to remedy any breach and bring your IVA to successful conclusion, but they will require your continued assistance to allow them to do this.

  1. Will I have to pay my Council Tax arrears if I’m in an IVA?

Any council tax arrears for previous years can be included in the IVA, however there are circumstances where Council Tax payments for the current Council Tax year should be maintained and will not be included in the IVA. These are:

  • You live with another adult who is also liable to make payments and they are not entering an IVA.
  • You live in shared accommodation.
  • You are in receipt of council tax support.

For anyone living alone or a couple both entering the IVA, the following applies:

Any balance remaining to the current Council Tax liability at the time the IVA is approved should be included as an unsecured creditor in the IVA, and as a result, payments will not be made to the Council for the remaining liability. However, IVA payments will be increased for the number of the months remaining until the end of the current council tax year.

For example: Council tax bill issued 01/04/2019 for £1200 to be paid at 12 monthly payments of £100. IVA approved 15/09/2019. At the time of approval, 6 monthly payments have been made, leaving a balance of £600 to be included in the IVA. 

As payments to Council Tax will stop for the next 6 months, the IVA payments for October, November, December, January, February and March will be £100 higher, resulting in an increased payment to all IVA creditors.

During the set-up of your IVA your Case Officer will explain how council tax will be treated depending on your personal circumstances. This will also be clearly stated within your IVA proposal.

If you have any issues with Council Tax after the IVA has been approved, please let your IVA administrator know straight away.

  1. Does being in an IVA affect claims for PPI?

As you may know, PPI is an insurance product which ensures that a debt is repaid even if the person owing the debt can’t earn income any more (illness, disability, lost job etc.). 

PPI was widely mis-sold by banks as a compulsory element of a loan without being fully explained, or even added onto a loan without the borrowers consent. Millions of people have been mis-sold PPI, and if you’re one of them you’ll be able to claim compensation from your lender.  

Any amounts refunded by your creditors in relation to PPI mis-selling claims are an asset of the IVA. This means that the proceeds from any mis-selling claim must be paid into the IVA; you won’t get any of the money for your own personal use.   

PayPlan Partnership Limited have employed the services of third party claims management companies (CMC) Equity in Finance Limited and Credo Claims Limited to assist our IVA clients with investigating and realising PPI claims. Any third party CMC fees will be paid out of the proceeds of the PPI mis-selling claim.  You may then be refunded some of the PPI claim, depending on the terms of your IVA. 

If you have investigated PPI yourself, or used another CMC, any funds received after the payment of the CMC fee will be due to your IVA.  Again, you may be refunded some of the PPI claim, depending on the terms of your IVA. 

Note: PPI may not be due to your IVA if you offered a lump sum payment to your creditors through your IVA. If in doubt, please contact your IVA administrator who will let you know if PPI will be due to your IVA.

  1. How will an IVA affect my credit rating?

If you’ve previously defaulted on any loans or other credit repayments, these defaults are likely to be recorded on your credit file already. However, entering into an IVA doesn’t mean your credit rating will suddenly improve. An IVA will remain on your credit file for 6 years after the IVA approval date, or until the completion date if your IVA lasts longer. You are likely to find that credit is hard to come by whilst in an IVA but this shouldn’t be a priority as your focus should be on repaying debts.

While you’re in your IVA, you mustn’t take out any credit over £500 (unless it’s credit for utility bills) without the permission of your IVA supervisor. You should also be aware that it will be hard for you to take out any new credit while the IVA – or any defaults – are still shown on your credit file.

  1. What happens once I’ve completed my IVA?

When you have made all of your agreed payments to the IVA and complied with all other terms, the completion process will commence.

In order to conclude your IVA, final checks will be made to confirm that your IVA administrator has received all of the required paperwork from your creditors, that payments have been allocated as they should and final administration work will be carried out.

This process will usually take around 3 months, but will also depend on the individual case and the work required.

Once this work has been completed a Completion Notice will be prepared. This is formal notice to you and all of your creditors that your IVA has been successfully completed.

Once your creditors receive this notice they will update their records on your credit file. Your IVA administrator may not have any access to update your credit file so if there are any issues, these will need to be addressed with the creditor or credit reference agencies directly.

The Insolvency Service are also notified that the IVA has completed and will update the Insolvency Register accordingly. It usually takes 3 months from notification for your details to be fully removed from the Insolvency Register.

  1. What is the ‘Equity clause’ in my IVA and how will it affect me?

If you own a property, it is likely your IVA will include an ‘equity clause’.  Equity is the current market value of your property minus the total outstanding amount of any mortgage and other loans secured on it.

Your share of any equity in your property is seen as an asset by your creditors. This means that if there is equity in your property, you may need to try to release some of it and pay it into your IVA.

If this applies to you, the equity clause will appear in the Proposals section of your IVA Proposal and will set out what is required in order to comply with this requirement.

Your IVA administrator will guide you through this process about 6 months before your scheduled IVA end date, initially requesting the documents required in order to confirm how much equity you have.

Once reviewed, if these documents confirm that you do have equity in your property you will need to consider attempting to remortgage to release the equity to pay in to the IVA. This is in accordance with the terms of the equity clause.

In reality, very few clients in IVA are able to remortgage and the likelihood is that you will instead extend your IVA by up to 12 monthly contributions.

  1. What if I’m made redundant during the IVA?

If you’re made redundant during your IVA, the first thing to do is not panic. IVAs are flexible, and can accommodate times where you may be unable to pay.

Your IVA proposal may set out what should happen in the event of your redundancy. If you are to receive a redundancy pay out, you will be allowed to retain funds to pay for monthly living costs, usually for 6 months, including the IVA payment.

If you start a new job soon after your redundancy and you don’t need the redundancy funds to cover ongoing living costs, you’ll be expected to pay any remaining funds into the IVA.

As soon as you know you are being made redundant you should contact your IVA administrator and discuss what options might be available to you as failure to do so could result in a breach of your IVA.

  1. What happens if I receive a windfall or inheritance during the IVA?

If you acquire any new assets during the IVA, such as a windfall from a lottery win or inheritance in the form of property or cash, it’s important that you let your IVA administrator know straight away as some or all of it may be due to your IVA.

Please note: An IVA usually allows you to repay a proportion of your debt, with the remainder written off following successful completion.

However, if your circumstances improve significantly during the term of the IVA, the maximum you would be required to pay would be your debts in full, along with PayPlan’s fees and costs.


An IVA is a debt solution that will stay on your credit reference file for six years from the date it was approved or until your IVA is completed, if it lasts for more than six years. 

There will be restrictions on your expenditure and lenders may reject your application for an IVA. If the arrangement fails (if you default), the creditors will reinstate interest and charges and may pursue bankruptcy. If you need to release equity, this may extend the arrangement and only unsecured debts will be discharged as part of the arrangement.

If you need help and advice on your debts, please contact our team on 0800 316 1833 or find out what debt solution could be best for you by visiting https://www.payplan.com/debt-help/

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