A redundancy while you are bound by an IVA can be worrying. It simply refers to you losing your job during your time period on an individual voluntary arrangement (IVA). For obvious reasons, this is a worrying aspect. Bring fired is never pleasant. It can happen to anyone, and affects many aspects of life. Especially on an IVA where financial stability is non-negotiable, redundancy is a looming threat.
Instead of worrying about it, you should consult experts to know more about redundancy as well as any other concerns you might have. Your IVA provider will support you through any upheaval. However, there are steps you can take to give yourself some clarity over the situation, and make the change in circumstances easier to deal with.
Inform Your IVA Provider Immediately
Bad news doesn’t get better sitting under a rock. Don’t get anxious over your IVA provider’s reactions. Inform them to handle the situation. If you have been awarded any redundancy funds, you’re eligible to use enough of them for household bills and your IVA payments. Meanwhile, you can keep looking for a job. The usual terms of IVA allow you to keep about six months’ pay from any redundancy settlement. If you find work again within six months period, more redundancy funds might be paid into your IVA.
Know Your Rights
If you receive any threatening debt enforcement action, such as from bailiffs or about a County Court judgment (CCJ), contact your IVA supervisor as soon as possible.
Update Your Budget
Find new ways to save money on your living costs and household bills until you get a new job. For example:
- Switch to a cheaper energy supplier
- Switch to a cheaper broadband contract
- Buy at a cheaper supermarket
- Take a break from your gym membership
- Stack up on essentials for cheap and easy meals
Do not take out credit without speaking to your IVA provider first, even in case of fund shortage for food.
IVA after Redundancy
If you are unable to afford IVA after your redundancy is solved, you’ll be given the option to explore other debt solutions by your supervisor. Consider the benefits or risks with other debt solutions carefully before deciding what to do next.
No Need to Panic- Let’s get these debts in order!
Once we look at the formal IVA agreement, many of us struggle to be calm about it. It is comprehensive, forbidding, and entirely intimidating/. Because of the formality of this arrangement (IVAs), there is a misconception that it doesn’t cater to or accommodate unexpected expenses such as car repairs, fires, thefts or other emergencies. This is simply untrue. There are many cases in which IVAs do allow for a specific level of leeway.
Thus, if you ever find yourself dealing with an unexpected expense during your IVA, there is precedent that it should be dealt with as urgently as possible. Contact your IVA provider as they are usually in the best position to help you. In addition, here are some practical tips to help you manage these unexpected costs on an IVA.
- Get some breathing space and don’t over-stress.
- Don’t deal with any emergencies alone. Contact your IVA provider and make them aware of the problems. They are legally and ethically bound to assist you.
- Payment breaks are a great source of a temporary reprieve during emergencies. Let your IVA provider decide the terms of how long they last. Explain the situation candidly and comprehensively and then plead for a payment break.
- A payment break may be suitable in these situations:
- Job loss
- Unexpected expense
- Stick to your budget and put money aside for emergencies every month.
- Locate other sources of financial assistance such as local authorities which can sometimes offer emergency funds, and food banks.
- Get several quotes for all emergency expenses to get the best rates and not overspend.
- Don’t take extra credit in any case. Taking out extra credit will endanger your IVA. It may even be terminated.
- Ask for help from creditors. Most creditors are very understanding and should work with you to come to an agreement.
Keep this tips in mind. Have more questions? Contact us now
An IVA has a simple definition, it is a legally binding agreement to pay off your debts in the most efficient manner. This also means that your creditors are also bound by similar rules. They need to stick to the IVA terms just as you do. If both of the sides carry forward their part of the deal, IVA will succeed. If you don’t, this can lead to your IVA failing.
IF any of the IVA terms is violated, it won’t fail instantly. Rather, there will be a breach notice issued to you. This notice is the indicator that you are in violation of the terms of contract. It also tells you how you can put it to right.
Following are the things however that could put your IVA in jeopardy.
- Missing payments
- Getting at least three months’ amount overdue
- Not selling an asset you agreed to sell in the IVA
- Not paying the proper percentage of additional income
- Not paying money from assets sales to your creditors
- Borrowing more than £500
- Not providing prudent information
- Not declaring windfalls
What happens next?
Your breach notice will detail all the problems in the IVA compliance failure. It gives you a period to fix things. If nothing changes, the creditors are given the option to terminate your IVA. It is possible to get your IVA back on track by providing the required information or by paying in additional income. It is also possible for your Supervisor to ask your creditors to vary the terms of your IVA according to your needs. Most of this requires the expertise of financial gurus.
Voluntarily Termination of IVA
You can request the IVA Supervisor for termination of your IVA. Put your request in writing. This may result in additional backdated interest and charges to your outstanding balances. It can also take several months for your name to be taken off the IVA register.
Debt should never be the word that defines your life. Paying off debt may be monumental task but it is exceedingly freeing and stress-relieving. If you are stuck in debt and have made the decision to get yourself out of it, you are on the completely right path. Having no debt hanging around your neck is a life changer. Commit to this path and go forth. But there are a few mistakes you should definitely avoid.
Retaining the same spending habits that got you in this mess.
If you won’t change your spending habits, you won’t ever get out of debt. Be more frugal will see an immediate impact on your daily spending habits. You just have to make better choices to balance your finances.
Trying to solve the issue of debt without help.
If you don’t want ask relatives or friends for help, contact a credit counseling agency and get experts to assist you. You will be made aware of multiple debt-relief solutions like debt management programs, credit consolidation, debt settlement, bankruptcy or even IVA.
Opting for a debt-relief program without total comprehension.
Instead of getting into the first program that offers quickest debt relief, you must comprehend two things. First, debt-relief programs typically take 3-5 years. Second, different companies have different reliability. Check these facts and other recommendations at the local state attorney’s office, credit unions, universities, and military bases as these are reliable sources. Keep alert for any licensing and consumer complaints issues.
Paying off the accounts and then closing them.
This hurts your credit score a lot. After you pay off an account, don’t close it. Having credit available, but not using it, shows restraint and can improve your score.
Not verifying your credit report.
Checking your credit report for inaccuracies is an important step in your journey to reduce your debt. Many credit card companies offer a free credit report. Check it closely for any mistakes.
Having Misguided Priorities
Consolidate your debts and make just one payment every month. This will help you prioritize your debts over other expenditure. Avoid using your credit cards as well because every time you reach for that card, you’ll be reminded that you’re adding, not subtracting to the problems on that page.
Simply speaking, the definition of an individual voluntary arrangement or an IVA is a formal and legal contract to pay back your debts to your creditors that both you and your creditors agree upon. The contract is fulfilled over a period of time.
Generally an IVA is flexible in many ways as it conforms to your requirements. On the other hand, it can be expensive and risky as well.
IVA Contract Benefits
Some benefits of an IVA are:
- It’s legally binding
- It’s time limited to usually 5 or 6 years
- You usually can pay only part of the debt
An IVA might be right for you if:
- Your arrears exceed £6,500
- There are at least 2 different creditors you owe money to
- You prefer to deal with your creditors indirectly
- You can make IVA payments every month
The IVA is a flexible option. For example, you may be able get an IVA if your debts don’t exceed £10,000. So, if you don’t meet all of these criteria, don’t lose hope.
An IVA might not be right for you if:
- If you don’t have a fixed income or a permanent job
- You work in accountancy, law or financial services
- You don’t have any spare income or a lump sum available to pay your creditors
Keep these facts in mind before you opt for an IVA. Fill up a quick contact form to make an informed decision.
Undertaking an IVA might be overwhelming for finance novices especially when exiting assets are under consideration. An asset is something of significant value that you own, for example a house, car or item of jewelry, or savings or shares. Assets aren’t necessarily included in your IVA. In most cases, you’ll be able to keep items like your phone, jewelry, car and home. But other assets have a lot of restrictions upon them. The overflow of information might confuse you if you are new in the finance world. Have no fear, the complete breakdown of where you stand after an IVA vis-à-vis your assets is given below.
IVA and Your Home
Under an IVA, the situation is unlikely where you’ll have to sell your home. However, there are conditions where you may have to re-mortgage before IVA end. This is done to release equity and depends on the amount of equity in your home. This amount is paid into your IVA. There is a silver lining as you won’t be expected to increase your mortgage to more than 85% of the value of your property. If you’re a first-time buyer, it’ll be harder to get a mortgage while you’re on an IVA.
IVA and Your Car
You’ll usually be able to keep your car depending on the value. Your insolvency practitioner will value the car to check how much it’s worth. If your car is worth quite a lot, your creditors might ask you to sell it. However, you’ll usually be allowed to keep some money to buy a replacement. If you own two or more cars, you will be asked to justify this. If you have a car on hire, you can keep making payments towards it so you can keep it.
Remember, each IVA is different as it’s tailored to suit your situation. The solutions will also be personalized. Now that you have a clearer picture, have a chat with one of our Insolvency Practitioners to alleviate all your worries.
Debt is harder to get rid of with no plan of action. IVA is just one of the options but it’s a very good if you have a lot to repay. If you are still on the fence about IVA, these advantages can help you decide whether to choose it or not.
Advantages of IVA
- You’ll be debt free in 5 Years. This is a realistic estimate as any IVA lasts for a fixed period of time, no longer than 5 years.
- No more interruptions. The telephone Calls and demands for payments will be stopped once the IVA is agreed upon. Your creditors will have to leave you alone by law.
- All interest and late payment charges will be done after confirmation of the IVA. Your creditors cannot add further charges by law.
- There is usually a single monthly payment you can afford to pay after you agree with your creditors on the amount. In some cases, you can even pay a one-off lump sum.
- You will not be forced to sell your home during an IVA. However, you may have to release some money through a remortgage.
- It is possible to keep certain necessary assets in an IVA such as a car. It is also possible to negotiate with creditors to keep other assets for extra IVA payments.
- Once you have successfully completed your arrangement, you will be allowed to borrow money and your credit rating will start to improve.
- You will avoid the specter of bankruptcy and pay back us much as you can reasonably afford on what you borrowed.
- Once agreed, the IVA is legally binding on all the parties involved so you will know exactly where you stand.
- The IVA does allow for variations if your situation changes and if agreed upon with creditors.
- Due to IVA, your creditors will not be allowed to take further legal action against you arbitrarily.
- An IVA is a private matter, there is no publicity in the news.
- Your job may not allow you to become bankrupt so an IVA is more acceptable. It is important to check the terms and conditions of employment to be sure of this.
Register your IVA now, contact us. Want to learn more? Our knowledge hub will help you figure out everything finance related!
Debt management is no child’s play. One needs to have full knowledge of all the tools in the arsenal before committing to a course of action. To pay off a debt, an IVA is a popular option. It is also a significant financial commitment. Before applying for an IVA, it is very important to know the following facts.
IVA payments last for 5-6 years and they’re based on the debtor’s disposable income
An IVA is only available if you are living in England, Wales.
Your IVA may not be accepted as the creditors you include in your IVA are not obliged to accept your proposal.
The unpaid debt included in the IVA arrangement is only written off after your payments are complete.
Only unsecured debts which are included in an IVA will be discharged after the arrangement is completed.
Secured debt like Mortgage are not included in the IVA arrangement and the payment towards these must be maintained. You must also maintain payments towards your other priority debts such as rent, fines, child support payments and utility bills.
An IVA will negatively affect your credit rating. A record of the Arrangement will remain on your credit file for 6 years from the date the Arrangement starts.
Your details like your name, birth date and address will be included in a public insolvency register which is publicly accessible via the internet. As such anyone could discover that you have started the Arrangement if they search for you on the register. These details will be taken off the register once your IVA is complete.
During your IVA you will be required to live within a restricted living expenses budget.
An IVA is not the only debt solution which might be suitable to resolve your debt problem.
Get more info on IVA debts and debt management plans on our blog. It’s never too late to start planning!
No matter if you are an introvert or an extrovert, a call from a debt collection agency can put the best of us on our back foot. That is never good news for anyone in financial trouble.
Considering all these factors, we can conclude that a call from a debt collector can be intimidating to say the least. The following tips will help you stay in control and calmly handle a debt collector so you avoid saying something that could create more problems. Keep this list close to your phone or memorized so you’re ready when you get a call from a debt collector:
- Never engage in casual conversation with a debt collector. You may give the debt collector information that could be used against you.
- Don’t answer any questions that you don’t want to answer, and never share personal or financial information.
- Ask the debt collector to send you a written accounting of exactly how much you owe. Ask that the accounting itemize the original amount of the debt plus all interest, fees, and collection costs.
- If you think that the amount the debt collector says you owe is incorrect, or if you do not agree that you owe any money, dispute it. Put your dispute in writing and send it to the debt collector no later than 30 days after the collector contacts you for the first time.
- Don’t expect to win this argument on the phone.
- If you don’t have the money, just say so, and tell the debt collector not to call you again. Your debt won’t go away, but the debt collector should stop bothering you.
- If you agree that you owe a debt, but you can’t afford to pay it in a lump sum, try negotiating an affordable payment plan. Don’t conclude this process on the phone, get the terms of any agreement you reach in writing before you make your first payment.
- Don’t ever agree to pay more than you can afford!
- If a debt collector threatens you, is verbally abusive, uses profane language, or calls you repeatedly during one day or day after day, take notes. The debt collector is violating federal law with these actions. Write down each violation, including the date and time it happens, the name of the debt collector or debt collection agency, and the specific debt you are contacted about. If things get really bad, share your information with a consumer law attorney: You may have grounds for a lawsuit.
While the last suggestion may be a bit outside the realm of possibility, never take anything for granted. Keep a thorough record of everything. For more financially sound advice, visit our blog.
Credit card debt is no joke. It is the easiest type of debt to rake up, with very few warning signs. One must be extra careful when spending money via credit. It can take ages to pay off. There are many rampant myths being about credit card debt. Let’s debunk them!
- “Too good to be true” is not just a linguistic expression, it also applies to the companies that claim to vanish your debt for peanuts. Don’t fall for the siren songs and read the fine print before entering into contracts. There is no completely painless way of debt resettlement.
- Debt settlement offer is not made to just anyone. It is usually only for customers afflicted with job loss, a divorce, medical problems or some other major life incident. Don’t rely on debt settlement if you don’t fall in these categories.
- Debt settlement methods do not always come with a price tag. There are many free self-help and expert help methods like snowball/debt dash, asking your lender for relief, rolling debt into a single lower-interest loan — that are available to anyone with the slightest bit of resourcefulness.
- Debt settlement company is never in control of your money. Not since October 2010, when the FTC blocked debt settlement companies that market their services from collecting advance fees.
- Debt settlement might harm your credit score just as much as declaring bankruptcy.
- A debt-settlement program is not cheap. The debt-settlement companies earn their share on a percentage of your total debt or on the amount forgiven. They also charge fees for late payment, added interest and income tax implications. The trick is to find a company that charges according to your budget and won’t trick you!
- Unsettles debts do not stay on the record forever. Debt Collection has a statute of limitations.
- Debt settlement or bankruptcy are never the only options. Forbearance and counseling are also two important factors to consider.
- A few debts do not qualify for settlement such as student loans, taxes owed, child support, alimony.
Any secured debts on a house, a car, a boat, or a collateralize personal loan can’t be easily settled, unless the security is repossessed, or demonstrated to be worthless. Therefore, have care before raking up credit card debt.