Managing a self-employed IVA

An Individual Voluntary Arrangement (IVA) is a legally-binding agreement between you and your creditors. Over the next five to six years, you’ll make affordable, regular payments to your creditors to repay your debts.

While your IVA’s active, the creditors included can’t take legal action against you, as long as you stick to your arrangement and keep making payments. Once you successfully complete your IVA, your remaining unsecured debts will be written off.

How does a budget work in a Self-Employed IVA?

Your Insolvency Practitioner (IP) will help create a budget based on your income and expenses. They will carefully consider your business costs, essential living expenses and one-off emergency costs. This budget must be approved by your creditors and determines how much you can afford to pay regularly.

Maximising your available money can help your IVA succeed. For example, consider switching to cheaper utility, phone or broadband providers to reduce your monthly bills.

It’s important to stick to your budget and keep in regular contact with your IP, especially if your circumstances change. Let them know about any extra money you receive, such as a windfall or inheritance.

Why not see what your budget would look like today with our helpful friend SAM?

Three tips for managing your IVA successfully

• Keep your paperwork organised so you can find everything easily.
• Monitor your budget regularly to control your spending.
• Stay in touch with your IP and update them if anything changes.

What to expect during your IVA

Your IVA will usually last between five and six years. It may end earlier if you can make a lump sum payment to clear your debts sooner.

While your IVA is running, you’ll need to stick to the terms, which may affect:

• Your spending – you’ll need to live within your budget. A portion of your extra income should go towards your debts.
• Your assets – you may have to sell valuable items (such as jewellery) to repay your debts. If you need your car for work, you may have to swap it for a cheaper model if it’s worth over £8,000 and if there’s equity in your home over £10,000, your IVA may be extended by another year. Learn more about the equity clause.
• Your work – your job isn’t usually affected unless you’re in professions like financial services, law or accountancy. Check with your IP, HR department or employment contract if you’re unsure.

Your IVA journey in brief

• Following your application, you’ll communicate with a Case Officer from your IP, usually by phone or online. Your IVA Proposal will be sent to your creditors for approval. It’ll be approved if at least 75% (by value) of voting creditors agree.
• Within about two to three weeks, you’ll usually get confirmation of acceptance. Once accepted, you’re protected from legal by creditors included in your IVA.
• If your proposal is declined, or you change your mind, we’re here to help you explore other options.
• Your IP will review your IVA progress every 12 months and check if anything has changed that affects your payments. You and your creditors will also receive an annual report. Here’s what you need to know about your IVA Annual Review.
• Near the end of your IVA, we’ll review your arrangement to make sure you’re on track to complete it as planned.
• After around 60 months (sometimes longer in certain cases), your final payment will be made, your IVA will be successfully completed and you’ll receive a completion certificate confirming the debts in your IVA are cleared.

You don’t need to contact your creditors yourself – your IP handles this for you.

Helping your IVA run smoothly

Keeping up with regular payments is very important. If you think you might miss a payment, tell your IP as soon as possible.

Life can throw curveballs – for example a car repair or a broken boiler. If this happens, you may be able to take a short payment break or adjust your payments, with your IP’s agreement. If your circumstances change long term, your IP can talk to your creditors to arrange a payment variation.

Can an IVA fail?

Your IVA could fail if:

• You regularly miss payments and fail to keep your IP informed.
• You borrow more than £500 without permission.
• You didn’t declare all your assets at the start.
• You don’t report extra income or windfalls.

If your IVA fails, you won’t owe any more IVA fees, but your debts will remain. We’ll help you explore other options.

Can I leave my IVA early?

You can ask your IP to end your IVA early, but your creditors may add back interest and charges. Your credit file will still show the IVA for six years.

If you’re struggling to keep up with payments, talk to your IP as soon as you can – there may be better options.

What if I have an emergency?

You can ask for a short payment break if you face an emergency. You might also be able to change your payments if your IP and creditors agree.

Tell your IP about any changes like:

• Pregnancy or maternity
• Losing your job
• Health issues
• Relationship changes like separation or divorce
• Unexpected expenses like boiler breakdowns or car repairs

Don’t take out extra credit to cover these costs – borrowing over £500 without your IP’s permission could harm your IVA. Your IP is there to support you, so get in touch if you need help.

Want to know more about a self-employed IVA?

We’re here to answer any questions you may have. Whether you’re exploring your options or ready to move forward with an IVA, our team is on hand to help you feel confident in your next step.

Get debt help online or call us on 0800 316 1833 for a confidential conversation.