Why does an IVA fail?
Starting an individual voluntary arrangement (IVA) can really help you feel like you’re getting back on your feet and in control of your finances. But while an IVA may set you off on the road to financial security, this isn’t always the case – it can sometimes fail.
In many cases, an IVA fails due to a lack of communication between the customer and the Insolvency Practitioner (IP) – that’s you and us. An IVA works best when we all work together, making the next five to six years as easy as possible.
We’ll take you through why an IVA can fail and what you can do to make sure it doesn’t happen.
Getting into arrears
One of the potential big problems with an IVA happens if you fall behind on payments. It can happen to anybody and is sometimes entirely unavoidable.
It’s whether we can resolve the situation that decides whether your IVA fails or can continue.
We may be able to pause payments for a short time while you get back on your feet. Then when everything’s back on track, we can resume your payments as soon as you’re ready.
If you’re just suffering a minor blip, you have the option to try clear those arrears within the term of your IVA. Or, you may be able to extend the length of the IVA to bring in those payments at the end.
Additional credit on an IVA
Most people have probably at least considered taking out a credit card just to help with their outgoings. After all, the minimal monthly repayments can seem so enticing, especially when things are tight and families are struggling with household bills.
But when you’re on an IVA, you shouldn’t take out any additional credit. If you do and you haven’t got our approval first, it could cause your IVA to fail.
One thing to consider is that we are here to make sure your payments are affordable for you.
So when things get tough and you just can’t make ends meet, don’t panic and think you have to rely on credit. If you get in touch with us, we can reassess your contributions to make sure that the amount you’re paying means you can afford your other expenses too.
If the reduction isn’t too significant, we can reduce your monthly contribution into the IVA without needing to obtain consent from your creditors.
How to have a successful IVA
A successful IVA does not necessarily mean one without a bump or two in the road. Many people have been able to recover from a ‘breach of terms’ and still go on to complete the IVA.
It can sometimes feel that the journey from approval to completion is one fraught with obstacles and IVA legislation can be hard to grasp sometimes. There’s nothing to worry about though – our teams are available to explain anything if you’re unsure.
IVA failure can occur when you don’t understand the situation you’re in.
So if things become difficult financially or you’ve had an unexpected shift in your personal situation, remember to contact us as soon as possible to see how we may be able to help.
You can email us at [email protected] brooks.co.uk or call us on 0330 102 0006.