CLARITY. Your IVA questions answered MONEY ADVICE LIFESTYLE BUDGETING

Transcription

1 CLARITY Your IVA questions answered BUDGETING LIFESTYLE MONEY ADVICE

2 GOT A QUESTION? Here s what we get asked the most At PayPlan, we help people resolve their debt problems by providing advice on a wide range of practical debt management solutions that enable them to repay their debt and plan for a better future. Although we understand the unsettling impact that debt can have on people s lives, we firmly believe that everyone can, and should, be allowed to live a happy life whilst repaying their debt. Over the last 22 years, we ve accumulated a wealth of knowledge on IVAs and have been asked many questions in that time. Here, we ve brought together the most common questions to help you and your clients. WHAT IS AN INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA)? An IVA is a formal agreement, between a client and their creditors which is put forward and supervised by an Insolvency Practitioner. A client typically settles a percentage of their debt in affordable monthly payments over a fixed term usually around five years. Each IVA is approved through a Creditors Meeting, and once approved, contractual interest and charges on the debt are frozen and creditor contact will stop (apart from statutory contact, however if a debtor is in a position to repay their debts in full then statutory interest currently at 8% will be applied). As long as the client keeps to their agreed, affordable payment schedule and terms of the IVA, the creditors agree to write off any outstanding, unsecured debt upon successful completion of the IVA. HOW MUCH DEBT DOES A CLIENT NEED FOR AN IVA? Different IVA providers have different qualifying criteria. PayPlan refers clients to PayPlan Partnership and they consider an IVA for anyone, however typical cases have a minimum unsecured debt level of around 7,000. HOW MUCH MONTHLY DISPOSABLE INCOME DOES A CLIENT NEED TO BE ELIGIBLE FOR AN IVA? Again, different IVA providers have different criteria, with many stipulating that at least 100 per month must be available. We believe in the importance of tailoring advice for each situation and in a client s ability to demonstrate that they can maintain payments so we always take the time to understand each client s circumstances, and make a decision on a case by case basis but a client must have a 50 surplus. IS A FACE TO FACE MEETING REQUIRED FOR AN IVA? Not usually. However, there is always an opportunity to meet face to face if clients want this. In some cases, it is a requirement that we meet face to face when the Insolvency Practitioner considers it helpful. The telephone service is usually more helpful as clients can get the support and advice that they need much faster. Clients can phone up and get help when they need it, there s no need to pre-book an appointment for general advice or queries and our advisers are available 8am-8pm Monday - Friday and 9am - 3pm Saturday. Clients can also make use of our online facility, PayPlanPlus where they can get in touch with us, see the details of their plan as well as send documents or paperwork instantly.

3 WHAT PAPERWORK OR INFORMATION IS REQUIRED FOR AN IVA? Many IVA providers need advisers to package and present each case to them with a detailed breakdown of income and expenditure, a list of creditors and all relevant background information. At PayPlan, we make the referral process quick and easy, all we need is the client s basic contact details and we will do the rest; collecting all the relevant information, giving you and the client confidence that nothing is missed. HOW LONG WILL IT TAKE FOR SOMEONE TO SPEAK TO MY CLIENT? The process differs between IVA providers, but PayPlan can speak to your client and start the process immediately. You can put your client in touch with PayPlan either: 1. By phone on Advisers can give clients our Freephone number for them to call, or alternatively we re happy to speak with advisers directly on the client s behalf. 2. Online. We can create a Secure Referral Form that is unique to a particular advice agency. Details can be sent to us securely and a PayPlan adviser will call the client back either the same day, or at a time that suits them. This also allows us to provide feedback on the progress of your cases. If you would like a secure referral form set up for your agency please contact your PayPlan Partnership Development Manager or Business Support on CAN A CLIENT DO AN IVA IF THEY AREN T INSOLVENT? Yes, someone can be what is known as cash insolvent and asset rich and still do an IVA (the statutory wording for cash insolvent is unable to repay their debts as they fall due, so if a client is defaulting on loans and cards then they re insolvent and may be eligible for an IVA). However, clients should be aware that if they have any equity in property they own or any other significant valuable assets, then they may be required to release some or all of this as part of the agreement, usually via a remortgage in the case of their properties (N.B the client isn t forced to sell their home. If the client can t remortgage they will make additional payments into their IVA for typically 12 months) CAN A CLIENT DO AN IVA IF THEY DON T OWN THEIR HOUSE? Yes. For many people an IVA is preferable to bankruptcy or a lengthy Debt Management Plan (DMP) even if they don t own their own home. For example, if a client is living in rented accommodation, bankruptcy could affect their tenancy and their job. The alternative of a DMP could take many years for debts to be repaid, especially with no guarantee of interest and charges being frozen (as with all DMPs). An IVA typically last for 5 years, the contractual interest and charges are frozen and a proportion of the debt is usually written off, making it an option to be considered, and it usually will not affect the client s home, tenancy or job. WILL MY CLIENTS IVA BE APPROVED? IVAs are not automatically approved, no matter who the IVA provider is. However, PayPlan Partnership and PayPlan Bespoke have a very close working relationship with creditors and their agents and this helps. TWO CLIENTS HAVE JOINT DEBTS WILL THEY NEED TO DO A JOINT IVA? No. There is no such thing as a Joint IVA as they are individual arrangements. It s important that the clients receive advice from a specialist like PayPlan where they have joint debts to make sure that the best solution is chosen to meet both clients circumstances (for example, both clients may have their own IVA, or one may opt for another debt solution like a DMP). This ensures that each client s requirements and responsibilities are clearly defined, removing any potential issues if circumstances were to change at some time in the future, such as separation. WHAT IF AN IVA IS APPROVED AND THEN THE CLIENT S CIRCUMSTANCES CHANGE? First of all, don t worry! If the terms allow, the Insolvency Practitioner can reduce the monthly payments by up to 15% without having to notify creditors, though a larger change to the IVA may mean that a second Creditors Meeting is needed to obtain creditor approval. As PayPlan Partnership and PayPlan Bespoke support the client throughout their IVA, their experts are on hand at all times to give help, advice and guidance. If a change to the IVA is needed, they ll coordinate everything to give the client the best chance of fulfilling their IVA. IS IT POSSIBLE TO TAKE A PAYMENT BREAK DURING AN IVA? Yes, if the terms of the IVA allow it, which in the majority of cases they do. Many things can change in 5 years, so it s important to work with a provider that understands this. If a client needs a payment break in an IVA with PayPlan Partnership and PayPlan Bespoke, they can contact their dedicated case officer and request a break of up to 9 months (initially 6 months with an addition of 3 months if required*). Payment breaks must always be approved by the Supervisor and must be for valid reason, for example for time off work with sickness, and the missed payments from the break will be added on to the end of the term of the IVA. Longer breaks are possible, but this needs the approval of the creditors. * Clients can use up to 6 months but if only 4 is used, all 6 months are fulfilled. WHAT HAPPENS IF A CLIENT RECEIVES A BONUS OR OVERTIME DURING THEIR IVA? If a client s income increases by less than 10% of their normal take home pay, then they can keep the whole amount of the increase. For higher increases, the client can keep 50% of the additional amount with the remainder going into the IVA. For example: A client receives normal take home pay of 1,000 per month and then receives an increase of 200 per month. They can keep 100 of the increase over the 10%, as this equates to 10% of their original normal take home amount ( 1,000 x 10% = 100). Of the remaining 100 of the increase they can keep 50%, so 50, with the other 50% being paid to the IVA. So out of the extra 200, the client keeps 150 and creditors receive the remaining 50.

4 WHAT HAPPENS IF A CLIENT RECEIVES A WINDFALL OR WINS SOME MONEY WHILST IN AN IVA? Clients will usually be expected to pay some or all of the money into the IVA. However there are some circumstances where this may not be the case, for example if the windfall is less than 500. PayPlan Partnership and PayPlan Bespoke will work with clients to establish exactly what is or isn t required considering their individual circumstances. WHAT IF A CLIENT IS SELF EMPLOYED AND HAS BUSINESS DEBTS, IS AN IVA STILL AN OPTION? Yes, Self Employed IVAs are available, but are a slightly different debt solution. Payplan Bespoke Solutions is one of the UK s largest Self Employed IVA providers, and have a dedicated team that will help clients understand their accounts and tax returns and PayPlan will ensure that they find a solution that enables them to continue to trade. A CLIENT HAS BEEN PAYING INTO THEIR IVA FOR OVER 4 YEARS BUT THEY ARE NOW UNABLE TO CONTINUE TO MAKE PAYMENTS (PERHAPS THROUGH ILLNESS OR REDUNDANCY). WHAT WILL HAPPEN? If the client s circumstances mean that there is no chance that they will change before the end of the IVA, it is possible to ask the creditors if they will accept what is known as Paid to Date settlement. This means they accept what has been paid so far as full settlement of the debt and agree to end the IVA early. This is based on the client s circumstances and needs to be approved by the creditors. In these instances, Payplan Partnership and PayPlan Bespoke will negotiate with creditors and support the client throughout. WHAT HAPPENS TO A CLIENT S DEBTS IF THEY DIE WHILST IN AN IVA? It s a common misconception that debts die with the client, but this is not the case. PayPlan are unique in that we provide a membership scheme that pays out a lump sum should a client die, as a part of PayPlan Partnership and PayPlan Bespoke s IVAs. This makes sure that if a client were to die during their IVA, then their creditors would receive a lump sum payment to help clear their outstanding debt. This gives clients peace of mind that their beneficiaries may not need to deal with their debt should the worst happen. Please note that there are exclusions to the membership scheme as detailed in the terms. WHAT IF I AM NOT SURE AN IVA IS AN OPTION? It s a good question there are a number of different options available and it s important to choose the best solution for the client. At PayPlan, we discuss ALL the available options with the client, offering expert advice and guidance so they can choose the option best suited to them. HOW WE CAN HELP YOU IVA ADVISER LINE PayPlan s dedicated IVA Adviser line is on hand to answer any questions about IVAs or Trust Deeds that you as an adviser may have. Whether you have questions about property, need some help with a failing IVA or just want to know more about the IVA offering, experienced IVA advisers are here to help, Monday Friday 9-5pm. CONSULTANCY We re happy to share our knowledge from over 20 years experience and Insolvency Practitioners are available to advisers to offer support as required. IVA TRAINING We re more than happy to provide free training for advisers on IVAs, utilising the expertise of our associated Partnership Managers and Insolvency Practitioners to provide comprehensive guidance.

5 LET S TALK Call our Business Support Helpline on us at businesssupport@payplan.com PayPlan.com FOLLOW US /PayPlan /PayPlan Or join in the chat at PayPlan.com/living-room Totemic Limited trading as Payplan is a limited company registered in England, Company No Registered office: Totemic Limited is authorised and regulated by the Financial Conduct Authority. Payplan and the Payplan Logo are trademarks of Totemic Limited Payplan Bespoke Solutions Limited is a limited company registered in England, Register No: Registered offices: Licensed Insolvency Practitioner: NT Payne ACA FCCA MIPA MABRP Licensed by Insolvency Practitioners Association (UK). Payplan and the Payplan logo are trademarks of Totemic Limited Payplan Partnership Limited is a limited company registered in England, Register No: Registered offices: Licensed Insolvency Practitioners: JN Harrison FCA MIPA FABRP Licensed by Insolvency Practitioners Association (UK): K W Marland MIPA FABRP Licensed by Insolvency Practitioners Association (UK). Payplan and the Payplan logo are trademarks of Totemic Limited