Many people naturally have concerns and questions about what will happen to their home, assets and job if they choose to enter into an IVA or any other related plans. Since an IVA is a legally binding agreement, it’s important to fully understand what you’re intending to enter into. After all, if your IVA fails then your creditors could apply to make you bankrupt.
In this article we take a look at these key issues and concerns in more detail. There is a specific form of IVA, which is adopted in some countries like Scotland – which is known as the Scottish Trust Deed. If you’re wondering what will happen to your assets when you enter into this debt management scheme, read below to find out.
What will happen to my home?
If you’re a homeowner and want to enter into an IVA, then it’s likely that your insolvency practitioner will require a full valuation of your property/properties. This will then enable him or her to determine whether there’s any equity in it and if so, how much.
Usually, if the amount of equity exceeds £5,000.00 then you’ll most likely be required to re-mortgage the property during the last year of your IVA in order to release any excess funds from it.
If you’re in rented accommodation, however, then an IVA won’t affect your tenancy agreement (provided that you’re not in arrears) and you’re not legally obliged to inform your landlord of it. If, of course, you intend to incorporate rent arrears into the IVA then you should speak to your practitioner about any implications this might have.
What will happen to my assets?
If you have any assets (such as vehicles, jewelry or other items of value) then you might want to consider selling them and putting the sale proceeds towards your IVA – which is exactly what happens in a trust deed Scotland. Your insolvency practitioner will be able to give you further advice about this but the important thing to remember is that you won’t be required any essentials such as clothes, furniture or vehicles needed for work etc.
What happens to any future assets or income?
Once you’re in your IVA you’ll need to stay in touch with your practitioner and declare any change in your circumstances, such as an income increase, the acquisition of valuable assets or any ‘windfall’ (such as a successful compensation claim or inheritance). Most IVA’s will contain what is known as a ‘windfall clause’. This basically means that any unexpected income will need to be declared and offered into the IVA.
Will an IVA affect my employment?
If your job role prohibits you from entering into an IVA, then your practitioner will want to consider other options – such as a debt relief order or separate repayment plans. Certain job types strictly prohibit you from entering into an IVA – for example, those in the police force, accountants, solicitors, prison officers and the armed forces etc. If you’re in any doubt as to whether an IVA will affect your employment then you should raise your concerns with your practitioner and if necessary, let him or her see a copy of your contract so that you’re absolutely clear on whether an IVA is a viable option given your circumstances. Remember, when it comes to debt management solutions there’s certainly no ‘one size fits all’ solution so you need to be sure that an IVA is absolutely right for you.
