IVA Frequently Asked Questions

If you have questions about IVAs (Individual Voluntary Arrangements), you’re in the right place. We’ve compiled answers to the most commonly asked questions to help you understand whether an IVA might be the right debt solution for you.

If you’re looking for advice tailored to your personal circumstances, call us at 0800 316 1833, start a chat with us on WhatsApp, or get help online at payplan.com.

Can I enter into an IVA?

If you live in England, Wales or Northern Ireland and are struggling with unsecured debts, an IVA could be a suitable solution.

To be eligible, you need to have a consistent surplus income after covering your essential living costs, which can be used to make monthly payments.

Alternatively, if you have access to a lump sum, you may be able to offer this to creditors as part of a Full and Final IVA.

Will my IVA be accepted?

An IVA will only go ahead if creditors who hold at least 75% by value of the total debt (of those who vote) agree to the proposal. Once accepted, all creditors included in the proposal are legally bound by the arrangement, even if they voted against it or didn’t vote at all.

How much does an IVA cost?

There are no upfront fees to enter an IVA with PayPlan. The costs associated with setting up and managing the arrangement are included within your agreed monthly payments. These fees are clearly outlined in your IVA proposal, so you know exactly what to expect. Click here to know more about the IVA fees.

How long does an IVA last?

Most IVAs last for 60 months, or five years. However, in cases where there is equity in a property, the arrangement may be extended by up to 12 additional months. A Full and Final IVA, where a lump sum is offered, usually concludes within 12 months, depending on creditor agreement.

Which debts can be included in an IVA?

You can include a wide range of unsecured debts in an IVA. This includes:

• Bank account overdrafts
• Loans from finance companies
• Credit or store card balances
• HMRC debts, such as outstanding tax and VAT
• Personal loans from family and friends
• Shortfalls on hire purchase agreements where the goods are no longer in your possession

Secured debts, such as mortgages, still need to be paid separately. Other debts that typically can’t be included are child maintenance arrears and student loans.

What happens if I can’t make IVA payments?

Missing IVA payments can lead to serious consequences, including the potential failure of your arrangement, which could result in a petition for bankruptcy.

Life is unpredictable, and if something changes that affects your income, such as illness, redundancy or a relationship breakdown, it’s important to contact your IVA Company immediately. They may be able to arrange a payment break or adjust your monthly payments, depending on your circumstances.

What happens if my financial situation improves during the IVA?

Your IVA includes an annual review where your income and expenditure (your budget) are reviewed.

If your disposable income increases, your IVA payments may also increase. Typically, 50% of any increased surplus income is added to your IVA payments, with the remaining 50% retained by you.

What if I receive a windfall during my IVA?

Windfalls such as lottery wins, gifts or inheritance must be declared to your IVA supervisor. These funds are considered assets and may need to be paid into the IVA to repay creditors.

The exact amount will depend on the terms of your arrangement, but in most cases, these funds will be used to pay down your debts.

Will my partner be affected by my IVA?

An IVA is an individual agreement and doesn’t directly affect your partner. However, if you have joint debts, your partner will remain fully liable for the entire balance.

Your IVA will cover your share, but creditors may still pursue your partner for the repayment of the joint liability.

Who will find out about my IVA?

IVAs are not advertised publicly in the same way as bankruptcies. Your IVA will be listed on the Insolvency Register, a publicly accessible database, but it won’t appear in newspapers or the London Gazette. Your entry is removed from the register three months after the arrangement is successfully completed.

What will happen to my pension?

Your state pension is unaffected by an IVA. However, your contributions to a personal or workplace pension may be restricted to the minimum required level during the term of the IVA.

If there’s a valid reason to contribute more, your IVA supervisor may seek approval from creditors to allow a higher contribution.

Can I arrange an IVA directly with my creditors?

No, you can’t set up an IVA on your own. An IVA is a formal, legally binding arrangement that must be managed by a licensed Insolvency Practitioner. This person prepares your proposal, negotiates with your creditors and oversees the administration of your IVA throughout its term.

What happens if I have equity in my property?

If you own a property and it has equity of £10,000 or more, which is based on 85% of the property value, your IVA may be extended for 12 months.

Can creditors chase me during the IVA?

Once your IVA is approved, included creditors are no longer allowed to pursue you for payments. While you may still receive some automated communications – such as statements – legal action and collection efforts must stop.

What is an Interim Order?

An Interim Order is a legal measure that can be used to pause creditor action while your IVA proposal is being prepared. This can be especially helpful if you’re facing legal action or court proceedings related to your debts.

Do I need to change my bank account?

If you hold a bank account with a creditor included in your IVA, that bank may use its ‘Right to offset’ to take funds from your account. In this case, you should switch to a basic bank account with a provider you don’t owe money to.

What should I do if a creditor contacts me?

Before your IVA is approved, it’s important to forward any contact from creditors to your case officer so they can include all relevant debts. After approval, if creditors continue to contact you, inform your IVA Company so they can resolve the issue.

What is an Annual Review?

Each year, you must complete an annual review of your finances. This helps ensure your IVA remains affordable and fair. If your income increases, 50% of the additional surplus will usually be paid into your IVA.

What happens if I miss payments?

If you miss payments, contact your IVA Company immediately. If three payments are missed, a formal breach notice may be issued. This gives you a chance to explain and potentially rectify the situation to avoid IVA failure. Missing payments can lead to your IVA to fail, which could result in a petition for bankruptcy.

What happens if I earn additional income during the IVA?

If you earn extra income such as overtime, commission or bonuses, you must inform your IVA Company within 14 days.

• If the extra income is 10% or less of your normal take-home pay, you can keep it all.
• If it’s more than 10%, a portion will need to be paid into your IVA.

For example, let’s say your monthly take-home pay is £2,000, and you get a £500 bonus.

1. 10% of £2,000 is £200, which you can keep.
2. The remaining £300 (£500 bonus – £200) is split in half:
   • £150 will go towards your IVA.
   • You can keep the other £150.

So, in total, you get to keep £350 of the £500 bonus, and £150 goes towards your IVA.

What if my personal details change?

It’s essential to notify your IVA Company of any changes to your circumstances, such as a new address, job or changes to your household. This allows your arrangement to be adjusted as needed.

What happens if my IVA fails?

An IVA can fail if you breach its terms, such as missing payments, taking new credit or not disclosing assets. If your IVA fails, creditors may reinstate interest, pursue legal action and even consider bankruptcy. However, your IVA provider will aim to work with you to avoid failure.

Will I have to pay Council Tax arrears?

Council Tax arrears from previous years can be included in your IVA. Current-year arrears may also be included, and your IVA payments may be adjusted to reflect the change. Your case officer will explain how this applies in your situation.

Does an IVA affect PPI claims?

If you’re due a refund from a PPI claim, the funds must be paid into your IVA. This is because PPI compensation is considered an asset. You may receive a portion of the refund depending on your IVA terms.

How does an IVA affect my credit rating?

An IVA will stay on your credit file for six years from the approval date. You may find it difficult to obtain new credit during this time, but your focus will likely be on completing the IVA and rebuilding your finances.

What happens after my IVA is completed?

Once your final payment is made and all requirements are met, your IVA Company will carry out final checks and issue a Completion Notice. This marks the successful end of your IVA. Your name will be removed from the Insolvency Register and creditors will update their records on your credit file.

What if I’m made redundant during the IVA?

If you’re made redundant, contact your IVA Company right away. You may be allowed to retain redundancy pay to cover essential costs for a limited period (usually six months). Any funds not needed for living expenses must be paid into the IVA.