IVA are particularly appropriate for self employed as you can exclude your business assets (on the basis that they are needed for trading) and offer monthly payment proposals. An IVA is a detailed payment proposal which is agreed by you and put to your creditors. The terms of the IVA depend on what you and your creditors are likely to agree. We have set out below typical examples of how IVA’s for self employed are used to sort out debt problems which can include both personal and business debts.
|Type of Terms
||When would this be suitable?
|60 affordable monthly contributions. Business assets are excluded from your arrangement.
||You live in rented accommodation or you have little equity in your property. After reviewing your self employed income and your reasonable household expenditure, you are able to offer monthly contributions for 5 years.
|60 affordable monthly contributions plus extra sum paid at the end of IVA in lieu of equity in residential property or 12 extra contributions if you cannot raise an extra sum. Again your business assets are excluded.
||You have an interest in your property which after deducting 15% from the value of your property and your secured debt, the balance is £5,000 or higher. In addition, you can afford to pay monthly contributions.
|6 – 12 month IVA offering lump sum and again excluding business assets.
||You cannot afford to make monthly contributions but there are friends, family, etc who can introduce a lump sum
|Proposals which offers contributions plus funds from the sale of a business asset.
||You are self employed and are able to sell an asset, introduce the funds and pay contributions for a period.
As you can see an IVA can be tailored to suit your circumstances. There are likely to be other options as well such as Debt Management, Bankruptcy, Debt Relief Order, Consolidation through refinancing and Dealing Direct with you creditors.
It is important that a detailed review is undertaken and that the advice given is independent. The Business Debt Advisor is a division of The Debt Advisor Ltd which is regulated by The Financial Conduct Authority for debt counselling. As such we are appropriately regulated to offer advice on both formal and informal solutions. If you have serious levels of debt owed in self assessment tax and VAT which have been outstanding for years, an IVA may prove problematic to get approved. Our Business Debt Advisor team will provide a candid opinion on the chances of your IVA being approved.
Once it has been agreed that an IVA is the most suitable solution for you, your offer is detailed in a document called proposals. The proposals set out in detail the following:-
- Background information and how your situation arose
- Your assets including your residential property, cars plus business assets, etc
- Your secured Debts (mortgage, secured loans, Higher Purchase)
- Your unsecured debts (credit cards, loans, tax debts, etc)
- Your proposals to creditors. For example 60 monthly contributions of an affordable sum.
- How your IVA is to be supervised and your obligations
- What happens if you cannot keep to the terms
- The fees to be charged
- How much creditors are likely to be paid
If your assets are at risk because of action taken by creditors, we can apply to court for an Interim Order. This means that creditors cannot commence or continue with any action against you and your assets unless the court permits them to do so.
A meeting is then held with your creditors where they are able to vote on whether to accept, alter or reject your proposals – 75% of creditors must agree to the proposal in order for the IVA to go-ahead. As long as your proposal demonstrates a genuine desire to repay as much of your debt as you can afford, it is likely that creditors will accept your IVA. It is our role to guide you on what creditors will find acceptable.
Once your IVA is approved all interest and charges on your unsecured debt is frozen. If creditors accept that you can only repay a proportion of your debt, the balance of your debt will be written off as long as you keep to the terms of your agreement. You will need to justify expenditure which exceeds these guidelines
Our case studies provide a number of real life examples of how we have used the IVA procedure to assist customers with serious levels of debt. For more information on the detail please visit the FAQ section of this site which details important questions on all appropriate debt solutions.
All debt solutions should be very carefully considered. Our team will provide you with the most appropriate advice taking into account your circumstances. There are a range of options which include IVA, Debt Management, Bankruptcy, Debt Relief Order, Debt Consolidation through refinancing and Dealing Direct with your Creditors all of which are covered on this site.
Fees will be charged if a solution is taken in order for us to set up your plan and maintain it – all fees will be outlined during your consultation. For further information on fees, please see the FAQ section of the different solutions available. Retained payment may place you further into arrears. You have the right to a cooling off period of 14 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term. Calls to our free phone number from mobile phones and other networks may be charged.
The Insolvency Service website has helpful information at https://www.gov.uk/options-for-paying-off-your-debts/overview to support those who find themselves in financial difficulty.
There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service on https://www.moneyadviceservice.org.uk/en/articles/where-to-go-to-get-free-debt-advice or 0300 500 5000 (8-8 Monday to Friday, 9-1 on Saturday).
The Business Debt Advisor Enquiry Line 0800 0851 825
Open Monday to Friday 9.00 am to 8.00 pm
Open Saturday 9.00 am to 1.30 pm