If you’ve decided that an Individual Voluntary Arrangement (IVA) is the right route out of debt for you, it’s time to prepare to meet your Insolvency Practitioner.
Debt can feel like a hole you just can’t climb out of. But sometimes, preparing your case for an IVA can feel almost as daunting. So in this guide, we’ll take you step-by-step through the process of applying for an IVA.
The effect of escaping debt
Debt has many effects and comes with many emotions. Studies show the effect of debt on mental health. Others highlight feelings of regret, guilt and anxiety.
But if debt comes with lots of associated negative effects, taking steps to escape it has many positive effects. As the Daily Record reported last year, seeking debt advice won’t just help your finances; it will improve your health and wellbeing.
An IVA will not be the right route out of debt for everyone. Read our guide to IVAs here to find out if it’s a viable option for you. For many, however, an IVA offers the chance to escape debt for good. As government figures show, 20,000 people chose an IVA in the last quarter alone. Here’s where to start with your application.
Can I apply for an IVA on my own?
No. To apply for an IVA you’ll need to go through an insolvency practitioner (IP). These are debt professionals who hold a licence which they will have gained by passing insolvency examinations, building experience in insolvency work and satisfying the regulator that they are competent to be an IP.
There is no alternative to using an IP if you want an IVA.
Will any IP do?
All IPs must have satisfied the regulator that they are competent to do the job, so from a technical perspective any practitioner will do, but fees do vary. Whilst that won’t usually matter a great deal (because the amount you pay towards your IVA is dependent on the amount you can afford, not the cost of your IP), it could have an affect if your IVA fails as the cost of your IP will be added to your outstanding debt.
Also, you’ll be working with your IP for at least the next five years, so it pays to shop around and choose a provider who a) doesn’t cost the earth and b) is someone you feel comfortable dealing with.
If you need an IVA in Scotland, we can help.
Does the IP work for me?
It’s not really a question of ‘whose side are they on’. Technically the job of an insolvency practitioner is to recover money on behalf of creditors. In practice, however, the best way to do that is to find a solution that works for everyone. If they put an IVA in place that you can’t afford, no one benefits, so they really will work to ensure that your IVA works for you.
How do I prepare to meet my IP?
Your insolvency practitioner will want to make the whole process as painless as possible, but you can make that process even easier by doing two things:
Put a budget together
An accurate budget will enable the IP to work out whether an IVA is right for you and establish how much money you have left over after your essential outgoings have been deducted. Whilst you can work from rough figures initially, your IP will want accurate figures from bank statements, wage slips etc, so you may as well pull everything together now. Your budget should include:
- Your wages (after tax and NI)
- Any other income (pensions, benefits, child maintenance, rent paid by lodgers etc)
Your savings or investments
- Bills (including your rent or mortgage, council tax, utilities, insurances, internet, student loans, mobile phone etc)
- Living costs (total up how much you pay each month for groceries, clothing, medical costs, household repairs etc)
- Transport (car loan; petrol, bus, train or taxi fares; breakdown cover, road tax)
- Family costs (vet bills, school uniform costs, childcare, school meals, pocket money etc)
- Leisure (list how much you spend on going out, gym memberships, takeaways, Netflix subscriptions, holidays, smoking, drinking, gambling etc)
- Payments towards savings or investment
List all the arrears you have, the total owed to each creditor, and any monthly repayments you are managing to make towards them.
Gather all your documents
For everything you receive and everything you pay, put the evidence together. That could be letters, payslips, credit agreements or emails, but try to ensure that anything you’ve listed in your budget has some written evidence to back it up.
Is it worth hiding anything from my IP?
It really isn’t. You mustn’t hide additional debts as your IP needs to know that you can afford your IVA. If they know you can’t afford it at the outset they may be able to offer an alternative. If they find out later, your IVA could fail and that may leave bankruptcy as your only option.
It’s also not worth hiding income, because if it later comes to light you’ll be made to repay it and your IVA could be extended.
Finally and most critically, lying to an insolvency practitioner is illegal and you could face a fine or prison term for doing it.
Can I get an IVA in Scotland?
No, but you can apply for a Scottish trust deed. These are often called ‘Scottish IVAs’ although trust deeds are not IVAs and there are numerous differences between the two. In terms of preparing to arrange a trust deed, however, the process is similar and the above guide should leave you well prepared.
- Is An IVA Worth It?
- What If I Can’t Pay My IVA?
- Can I Get An IVA If I’m Self Employed?
- Rebuilding My Credit Rating After An IVA
- IVAs: What Will I Need To Show My Insolvency Practitioner?
- Who’s Most Likely to Need an IVA?
- How Much Does An IVA Cost?
- Can I Afford An IVA?
- IVAs – Can I Lose My Home?
- IVA And Trust Deeds | Whats The Difference?
- Apply For An IVA
- How Will My IVA Affect My Parents?
- An IVA Mythbuster
- Can An IVA Be Rejected?
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here