Wondering what happens at the end of an Individual Voluntary Arrangement (IVA), and whether there is any long-term impact? Let’s learn more about how an IVA is completed, how long it takes, and the steps you might take next.
How Long Does an IVA Last?
An IVA is a debt solution agreement that you enter into with a licensed insolvency practitioner. This is a legally enforceable agreement between you and your creditors over a set period of time. This will be agreed upon during a consultation that will include yourself and the insolvency practitioner, and then approved by your creditors.
Typically, an IVA will last for 60 to 72 months, or 5-6 years. Therefore, the IVA will last until you have made your 60th or 72nd payment. At NDH Financial, our IVAs usually last for 60 months (five years).
However, it is important to note that there is no actual set length of an IVA stipulated in the Insolvency Act 1986. Thus, it is essential to double-check your agreement to see how long your binding arrangement will last. This might be anything from a one-off payment or lump sum payment to requiring an additional payment at the end of the term.
During your voluntary arrangement with the insolvency company, you might find yourself having less disposable income or surplus income each month, and thus not being able to afford your payments. This is particularly true of people who rely on seasonal income. In these cases, you may be able to arrange a payment break and pick up repayments once your income increases. This means that the term of your IVA will be longer to reflect the length of the break you required.
Conversely, you may find yourself with additional income, such as if you are in receipt of a pay rise. If your income increases, you might be able to afford more each month, and your payments may increase. In this case, your arrangement will not be shortened, and creditors will receive a higher dividend, however, you IVA will finish early if you end up paying your debts in full, plus the fees of the arrangement.
What Happens at the End of an IVA?
After you have made your final payment, provided you have complied with the other obligations, such as providing your documentation for your annual review, you should receive a certificate of completion in the form of a final report and letter. The certificate of completion should be issued within 6 months of your final payment, provided you have complied with all of your obligations, although you will typically receive this up to 12 weeks after the payment has been made. The insolvency practitioner requires this time to complete the final administration, such as agreeing outstanding creditor claims and paying the final dividend.
If you haven’t received your certificate after 12 weeks, just get in touch to confirm what the delay might be.
Your certificate of completion should serve as a positive step in the right direction - it is something to be proud of! Once you have received your certificate, you will be able to rebuild your credit score.
How Do I Rebuild My Credit History?
Your IVA will stay on your credit history for six years from when the debt solution was created, unless your IVA lasts for over six years, in which case it will stay on your credit file until you make your final payment.
You can check whether it is still on your credit records by obtaining a credit check. You can get this for free at a number of credit reference agencies and debt charities, such as Experian credit. This will also provide you with a credit score, otherwise known as a credit rating.
Once you know your credit score, you can begin to rebuild your rating. Your credit score lets lenders know how risky it is to lend you money - in other words, how likely you are to make repayments on time or end up with debt.
Essentially, any loans you take out and repayments you make on time will contribute to a good credit score. Thus, you should keep the level of debt below what you can afford to repay.
To summarise the process of completing an IVA, here is a checklist of everything you need to do.
- Set up an IVA with a licensed insolvency practitioner,including unsecured debt and joint debts but not including student loans and child support.
- Have your IVA approved by 75% of the relevant creditors.
- Pay the licensed insolvency practitioner their fees, although these will usually be taken from the payments you make into the IVA.
- Make every payment laid out in your IVA to your insolvency practitioner, and if you are unable to do so, contact the insolvency practitioner so they can discuss potential solutions.
- After the final payment, you will receive a completion certificate from your insolvency practitioner. If you have not received a certificate of completion within 12 weeks of your final payment, get in touch with your insolvency practitioner.
- Your insolvency practitioner will then let the Insolvency Service know that you have completed your IVA.
- The Insolvency Service will remove you from the Insolvency Register. This can take up to three months.
- Your IVA will remain on your credit report for six years from the date it was created. However, if your IVA lasts longer than six years, it will only stay on your credit record until you have made the final payment.
Here at NDH Financial, we are committed to helping and supporting those living in debt. We will always treat you with dignity and respect, doing our very best to support you in becoming debt-free. Our team of professionals are dedicated to making the process as transparent as possible, communicating with you at every stage of the journey so you are always in the know.
So, if you require more information about how we might assist you, contact us today for a free consultation. In this session, we will discuss your available options, ensuring that the IVA is right for you based on your circumstances and legal requirements, making applying for an IVA as simple as possible.