I have an IVA and I’ve received a bonus or overtime payment. What do I do?

In most IVAs, half of any overtime or bonuses must be paid into the arrangement as additional funds for the benefit of your creditors (see section 2.4 in your proposal).

You can forward details to our Review Team, who will work out what needs to be introduced for you. It makes sense to pay these amounts over as you go. However tempting it may be to hang on to the cash it will need to be paid in the end – and it’s much harder to catch up if you leave it. Creditors may have imposed modifications to this, which will be shown in your Chairman’s Report.

In an IVA when do my creditors receive payment?

There are industry standard arrangements in place for sending cash to your creditors. Typically we send the money every quarter. On some older cases it may be less frequent. But this is a matter between us, and your creditors and doesn’t affect your IVA. Don’t forget all interest and charges are stopped whilst the IVA is in place.

Does the money accrued in my IVA account earn interest (and what happens to it)?

We keep the best use of funds under review. At present interest rates are low. We have made a deal that we will forego interest in exchange for no charges on IVA accounts. This may change as the interest rate changes.

With an IVA what will happen to my home?

An IVA will not normally require you to sell your home. However, your agreement may include the release of equity, which usually occurs towards the end of the IVA.

When your IVA is approved, your Supervisor usually applies for a “restriction” on your property, asking you to sign and return a form that is lodged at the Land Registry. This restriction tells other people, such as potential buyers or banks, that an IVA is in progress – and it also makes your Supervisor aware of any dealings on the property.

If you want to sell the property, or undertake other transactions that affect it, contact us first. The restriction is removed following successful completion of the IVA.

Why do I have to try and re-mortgage in the last year of my IVA?

If you are a homeowner and you have equity in the property, creditors will ask for a proportion of this as well as your monthly contributions.

If there is little or no equity in the house at the start of the IVA, you can still be asked to have the house valued in the fourth year of the arrangement. Your share of any equity at this stage would usually be released for the benefit of the creditors via a re-mortgage.


Will my job be safe if I’ve been made bankrupt?

Not always. If you are a member of a professional body you will need to check to see if you will lose your membership. This can result in you being unable to continue in your current role.

Further clarification will be available if you look at the terms of your contract of employment.

What bankruptcy advice should I get?

Always seek your own legal or financial advice about becoming bankrupt and the other options available to you. Official bodies like courts or the Insolvency Service won’t help you decide on your most appropriate way forward.

Debt Free Direct is happy to help you to review your own circumstances and advise on the most appropriate solutions available to you.

What are my alternatives to bankruptcy?

If bankruptcy isn’t a suitable or an agreeable option to manage your debt problems then you may want to consider the following options:

  • An informal arrangement with your creditors. You could write to all of them explaining your current financial position and agree an affordable payment plan to repay the debt.
  • A debt management company that will negotiate monthly payment with the people you owe money to as part of a Debt Management Plan. Your only obligation will be to provide them with regular information about changes in circumstance and make the agreed monthly payment, which they will pay to the people you owe money to. The arrangement generally continues until the debts and any accruing interest are repaid in full.
  • An Individual Voluntary Arrangement (IVA). This is a legally binding contract between you and people you owe money to – see our IVA FAQ’s.
What happens in court during a bankruptcy hearing?

The first step is to complete and submit the necessary forms with the bankruptcy fee. These will petition the bankruptcy clerk for you to become bankrupt with the County Court that has jurisdiction for bankruptcy in your local area.

The bankruptcy clerk will give you an appointment when your application for a bankruptcy order will be heard. This can sometimes be on the same day as you submit the application.

At your hearing, the court will do one of the following:

  • Stay or postpone proceedings – usually to await more information in which case a further hearing date will be set.
  • Dismiss your petition.
  • Appoint an insolvency practitioner if an Individual Voluntary Arrangement (IVA) is found to be more suitable.
  • Grant your petition if becoming bankrupt is found to be the way forward.
How long will I be bankrupt?

The general rule is that you will be discharged after a maximum period of twelve months and will no longer be bankrupt. This period can be shorter should the Official Receiver complete his enquiries earlier and file a notice to that effect in court.

The duration of the bankruptcy can also be altered in the following circumstances:

  • The court annuls the order on the grounds that all debts have been paid in full.
  • The court annuls the bankruptcy on the ground that the original order was not appropriate.
  • The discharge has been suspended as a result of failure to co-operate with the Official Receiver or Trustee. Only after the breach causing the suspension has been rectified will the twelve-month period continue.

Although you are no longer bankrupt once discharged, it’s important to note that its effects may extend much longer, affecting your credit rating, for example.


Can I remortgage if I have a fixed / discounted mortgage?

Yes, but you will normally have to pay an early settlement charge to your lender. If your settlement charge is high it might be best to opt for a secured loan.

Will a consolidation loan help me?

If you can consolidate all of your existing debts into a loan that offers lower total repayments then a consolidation loan might be the best solution; you will save money in the long run and avoid more drastic solutions.

This might not be possible in some cases as many people who are experiencing serious financial difficulties tend to have poor credit ratings; if this is the case then taking on more financial responsibility is likely to make your situation worse.

Are there any upfront fees on secured loans?

Not on secured loans. A remortgage application fee will cover the cost of valuation, mortgage reference and administration costs.

How long does the remortgage process take?

Remortgages normally take approximately 6 weeks and secured loans approximately 3 weeks.


I have received a letter saying “Notice of Sums in Arrears”

At least once a year, following a change in the Consumer Credit Act 1974, your creditors are legally required to provide you with a statement advising of the arrears on your account. These letters are of a standard format, are for information only and no action is required.

I have received a letter from the bailiff's office

Please do not ignore this kind of correspondence. The bailiff will require a copy of your Chairman’s Report, showing that you are in an approved IVA. This should stop any further action.


If the bailiff does come to your property, they cannot legally force entry and have to stay outside unless invited in by yourself.


If you do not have your Chairman’s Report to hand, take the bailiff’s contact details, then call Debt Free Direct on 0344 826 0625 and we can fax the report straight to the bailiff’s office.

A debt collection agency is chasing me?

Many creditors pass accounts to debt collection agencies, who will try to get you to make a payment. This is normal, and once again nothing to be concerned about.


If you are contacted by a collections agency, give them proof that you have entered into an IVA (Send a copy of your Chairman's Report) so they can update their systems.


Deal with them just as you would one of your original creditors. Let us know if you receive any contact from a collections agency, so we can update our systems.

Am I still being charged interest?

No. Since unsecured creditors are bound by the terms of the IVA, the amount you owe on the day of your Meeting of Creditors will not increase, and your IVA freezes the interest rates. If you receive a statement within 90 days of the approval of your IVA that shows interest is still being applied, no action is required.

What can I do about creditors contacting me?

Don’t panic. If the creditor contacts you by phone say “Thank you for your call, I have now entered an IVA. If you could give me an email address/fax number/postal address I will send you a copy of my Chairman’s Report. In the meantime, please put my account on hold until you have updated your systems.” Please also give them your reference number with Debt Free Direct.


Once they've given you a contact address, you can send them a copy of your Chairman’s Report, which is proof that you have entered into an IVA legally. Download our template which is a suitable covering letter – a copy of your Chairman’s Report will have been sent to you