6 IVA myths holding you back

I will need to sell my home if I go into an IVA

This is perhaps one of the biggest fears people have when considering going into a formal debt arrangement. No one wants to do anything that could risk their home and that’s understandable. That’s why it’s important to know that you are not obliged to sell your home if you enter an IVA. You may, however, be asked to release equity or remortgage your property by your insolvency practitioner, depending on the value of your home. This should be discussed in full to put your mind at ease before entering the arrangement and make sure your plan is tailored to your circumstances.

Everyone will know about my IVA

OK, so this one isn’t actually a myth, but it isn’t as bad as it may seem – not everyone will know. When you enter an IVA, it will be recorded on the Insolvency Register, which is a public register that is maintained by the government. It will also be registered on your credit file and with credit reference agencies for six years after the date it’s approved. But why are you including this in a list of IVA myths, we hear you ask? Well it’s important to know that no one can access your credit file without your permission as it’s private, and although the Insolvency Register is a matter of public record, it is unlikely anyone will see it as it can only be accessed through a government website.

I’ll be left with nothing to live on

Another common myth is that all of the spare money you have each month will need to go towards your arrangement, leaving you with nothing to live on. Yes, you will need to pay your disposable income towards your debt, but this is based on your affordability after calculating your living expenses. Your expenses can take into account things such as home repairs, clothing and entertainment.

All of the people I owe money to need to agree to the IVA

Only 75% of the people you owe money to will need to agree to your proposal at a ‘creditor’s meeting’ for your IVA to be approved. Even if some creditors vote against your application it could still be approved by those who have a higher proportion of your debt. If your IVA is approved, it will be legally binding for all of your creditors.

I can’t change my payments if my circumstances change

This is a common misconception about IVAs. Sometimes life takes twists and turns we don’t expect and it’s important that your IVA payments can fit in with that. If your circumstances change significantly it’s important not to panic. Simply contact your IVA supervisor. They’ll be able to help by calling a ‘variation meeting’ with your creditors to vote on changes to your IVA. From redundancy to a relationship break-up there are a host of reasons why you may need to make changes to your payments – no matter what, it’s important you talk to your provider as soon as possible.

You can’t get a mortgage after an IVA

If you’re keen to get on the property ladder you may be worried about how an IVA could affect your chances of getting a mortgage in the future. An IVA will affect your credit rating; however, it also offers the chance of a fresh start. The best way to work towards getting a mortgage following an IVA is to rebuild your credit score – this shows that you can repay what you borrow and will be able to keep up with payments. It can seem like a long process but it’s worth doing to make sure you get the best possible deal in the future.

Making the decision to deal with your debt is a big step for a whole host of reasons, so don’t be deterred by the myths. Our experienced advisors are on hand to guide you through the process of finding the best solution for your needs.

You could write off as much as 90% of unsecured debt, pay as little as £85 per month, stop creditor pressure and freeze interest and charges using an IVA.

If you’re wondering when the best time to deal with your debt is, it’s now – you deserve to have your own money again.