Regaining Control Of Your Finances

Customers

Your IVA is approved – now you can address your debt problems!

Regaining control of your finances is a major achievement. Good advice mattered at the start of the process, and it is just as important to have the right information over time as you manage your problems.

This existing customer page tries to answer any questions you may have about the IVA process, and about changes in your circumstances over time. If the information you need is not here, then of course one of our advisers will be happy to help you.

• The Main Stages Of An IVA
• Dealing With Creditors
• Make Your Money Go Further – The Best Deals
• Customer FAQ’s About The IVA Process
• Useful Contacts

Contact Customer Support

• Call us: 0845 296 0117

Customer Enquiries - (General queries)
Monday to Friday 9.00am – 6.00pm.

Customer Assistance - (Payment issues)
Monday to Friday 8.00am – 8.00pm

Email us: customerenquiries@debtfreedirect.co.uk

• Fax us: 0870 241 9617
• Write to: Debt Free Direct, Fairclough House, Church Street, Adlington, Lancashire, PR7 4EX.

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The Main Stages of An IVA

• Start – Your meeting is approved
  We are your first point of contact for all queries regarding your IVA. We will guide and assist you in the best way possible throughout your IVA with any problems or queries you have.
• Within the first – 3 months
  An initial review of your file will be completed. If you own or have an interest in a property, a Land Registry restriction form will be sent out to you.
• At the first anniversary and then every year
  An annual review will be completed on every anniversary of the approval of your IVA. This looks at your case in depth and informs you and your creditors of your progress.Your contributions and their affordability, as agreed by you and your creditors at the start of the IVA, are assessed to ensure the correct contribution is maintained.This review is completed every year or when there is a change to your circumstances. More information on the annual review process can be found here.
• At any time
  If you are struggling to meet your monthly contributions, or if your circumstances change, we will assist you. There are a number of options which we will be happy to discuss.
• Throughout your arrangement
  As part of our customer care programme, you will be contacted by our customer care team regularly. They will be able to assist you with any queries or concerns you may have.
• After the last 12 months
  When your case completes, all of your creditors will have submitted a claim. Once the final review has been completed, your IVA will be concluded. At this point certificates of completion will be sent to your creditors and your credit report will be updated.

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Dealing With Creditors

An IVA is designed in part to make sure that you don’t have to respond constantly to calls and letters from people you owe money to (your creditors). At Debt Free Direct we try hard to ensure that your creditors stop contacting you as soon as possible. – However – during the first few months you will probably still have to deal with some letters or phone calls.

The information in the sections below – are designed to help you respond to your creditors in the correct and right manner.

What to do when creditors get in touch

Type of contact	What to do
Letter from original creditor	No action required – destroy letter
Letter from additional creditor	Forward letter to Debt Free Direct
Phone call from original creditor	Confirm to them that you are in an approved IVA
Letter from Collection company	Scan and email to customerenquiries@debtfreedirect.co.uk Fax to 0870 241 9671. We will update our records and forward a copy of your Chairman’s Report to confirm that you are in an IVA.

Letter Templates
Below are three letter templates that you will find useful in dealing with any communication you receive from your creditors.

• Sending a copy of your Chairman’s Report to a creditor
• Requiring your contact details to be removed from creditors’ systems
• Limitation act letter (for dealing with old debts)

How To Deal With Creditors
The most important thing to remember if a creditor contacts you is that your IVA means you are fully protected from any further action. An IVA is a legally binding agreement between yourself and your creditors. If in doubt about a particular debt, always refer to your Appendix D of your proposal: if the debt is listed there then it is included in your IVA. Even if you have forgotten to include a creditor in your proposal we are likely to be able to include them later.

The OFT has strict guidelines on how creditors can behave, and some advice on how you can deal with different circumstances is below. Once you have told your creditors that you have handed your affairs over to an insolvency firm, they are not supposed to contact you further. If you do receive a phone call or letter from them then you should refer them to the OFT’s Debt Collection guidelines.

For further details see: OFT guidance (PDF – opens in a new window)

1. My creditors are still contacting me?
Contact from creditors may not stop immediately, but your unsecured creditors are bound by the terms of your IVA. They must cease to pursue all legal action for recovery of unsecured debts. In practice, they may take six to eight weeks from the date of approval to catch up. Large banks and credit houses and other lenders are not always efficient at communicating the change to their various departments, and the debt collection department may be the last to hear of an approved IVA. Creditors or debt collectors who tell you that they “do not accept IVA payments” or that the IVA insolvency practitioner has never contacted them are just trying to get money out of you, and you do not need to make payments to them outside of the IVA.

2. 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 a IVA. If you could give me a 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 have 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. Please see our template letters for a suitable covering letter – a copy of your Chairman’s Report will have been attached to your Welcome E-mail.

3. 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.

4. 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. You may even get strongly worded letters or threats of Court action. In that case, give the agency proof that you have entered into an IVA so they can update their systems – in other words, deal with them just as you would one of your original creditors. We would advise you to forward the letter from the Debt Collection Agency to Debt Free Direct, so we can update our systems.

5. I have received a letter from the Bailiffs 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. That should stop any further action. If the Bailiff does come to your property, he cannot legally force entry and has 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 and we can fax the report straight to the Bailiff’s office.

6. 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, and are for information only, and no action is required.

7. I have received a letter threatening doorstep collections.
If you receive a letter of this kind or someone calls at your property, remember that you are fully protected by your IVA, simply hand over a copy of your Chairman’s Report.

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Make Your Money Go Further

One of the best ways to make life easier during your IVA is to cut unnecessary outgoings as much as possible. Large bills such as gas, water, electricity, phone and insurance can make a big difference to what you can afford to do.

The MoneyExtra website is a great way to find some of the best deals around. Clients save an average of £200 per year on various costs when they use the site.

Go to moneyextra.com now for your own money-saving search.

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Customer FAQ’s About The IVA Process

Circumstances can change during your IVA and you may have questions about a whole range of issues, from what to do about a bonus payment, through to what happens if a monthly contribution is missed.The links below give you answers to the questions we are asked most often. If you can’t find the answer you to your question here then please contact a Debt Free Direct advisor on 0845 296 0117.

• General FAQ’s
• Struggling with your payments
• Completion of your IVA
• Annual review

General Customer FAQ’s

• Q. What changes do I need to tell you about?
• Q. How will my monthly contributions be taken?
• Q.My payment is due but my standing order hasn’t been set up. What should I do?
• Q. I have received a bonus or overtime payment. What do I do?
• Q. When do my creditors receive payment?
• Q. Does the money accrued in my IVA account earn interest (and what happens to it)?
• Q. What will happen to my home?
• Q. Why do I have to try and re-mortgage in the last year of my IVA?
• Q. My proposal included selling/realising other assets – what do I need to do?
• Q. How do I deal with my creditors once I’m in an IVA?
• Q. What if I find a debt for a creditor that isn’t included in the IVA?
• Q. Is it possible to finish my IVA early?
• Q. How can I settle my IVA early?
• Q. How will my credit rating be affected whilst in the IVA?

What changes do I need to tell you about?
If any changes to your circumstances might affect your ability to meet your obligations under the IVA, contact us immediately. You should also tell us if you receive any unexpected large payments such as inheritances. These could affect your IVA and could be payable into the arrangement. Please ensure that you notify us of any address or telephone number changes.

How will my monthly contributions be taken?
You would normally use a standing order to make your monthly contributions to the IVA. You can also make contributions by debit card by calling our Account Management Team on 0845 2960117 and selecting Option 1. You need to make sure that contributions are made on time and in accordance with the agreement. If you have any concerns regarding this please contact us immediately.

My payment is due but my standing order hasn’t been set up. What should I do?
Only you can set up a standing order so it is important to act quickly. Please contact your bank to set up the standing order – we can provide a standing order mandate for this. Above all, don’t spend the funds, you have committed to contributing to the IVA because it is vital to adhere to the terms and conditions. If time is against you don’t forget that you can make a debit card payment whilst your standing order is being processed.

I have 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.

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.

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. Note that the restriction does not let your Supervisor sell your property. The restriction is removed following successful completion of the IVA.

Where appropriate, we will contact you when it is time to re-mortgage your property, and can assist you in this process.

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.

My proposal included selling/realising other assets – what do I need to do?
Sometimes an IVA requires the sale of certain assets or the surrender of insurance policies etc. It is your responsibility to do this, and you will normally have three months to sell or realise assets (but check your own agreed terms in Section 2 of your proposal). It is best to start the sale process and send us the funds as soon as possible, because failure to hand the proceeds to the Supervisor on time can cause the IVA to fail. If you are having any problems, you need to contact us as soon as possible.

How do I deal with my creditors once I’m in an IVA?
Letters and phone calls from your creditors for the first 90 days of an IVA is normal and requires no action. A “Chairman’s Report” outlining the outcome of the meeting of creditors has been sent to all people you owe money to (those you have told us about) and this confirms that your IVA has been approved.

Sometimes creditors and their collection agencies take time to update their records. Simply advise them that your IVA has been agreed and that they should have received a copy of your Chairman’s Report. It may be necessary for you to send another copy to them. For further information regarding creditor harassment please see our “Dealing with creditors” page.

What if I find a debt for a creditor that isn’t included in the IVA?
Always check on Appendix D of your proposal for all creditors that are included in the IVA. If a new creditor comes to light, check that you agree with the amount of the debt and forward the letter onto us. Please also include a covering letter telling us why this debt wasn’t originally included. We can almost always include overlooked creditors. Note that new debts added into the IVA can decrease the dividend payable to your creditors. Each case is reviewed individually and your Supervisor will tell you what needs to happen next.

Is it possible to finish my IVA early?
Yes – and your Supervisor has a duty to ensure that any offer presented to your creditors is in both their interests and yours: that it is fair to both parties. Your Supervisor will consider many factors including your current situation, how much you are offering, the level of return to your creditors and the conduct of the IVA. There is no penalty for paying off an IVA early and your creditors may sometimes even allow the final sum to be reduced. Remember, however, that your creditors are legally entitled to 100% of what you owe them.

How can I settle my IVA early?
Remortgage: There may be more equity in your property than you realise, and a re-mortgage can be a realistic way of ending your IVA early. You may even be able to make a proposal to introduce equity early in full and final settlement of your IVA.

Sale of Property: As with a re-mortgage, there may be equity in your property that would allow you to settle early. Selling your home may seem drastic, but it can mean a fresh start in life. If you are fortunate, you may be able to retain a sum of equity to enable you to start over.

Third-Party Funds: Sometimes a family member or friend will offer a lump sum so you can suggest early settlement to your Supervisor. Most creditors will accept a reasonable offer from your Supervisor, in order to conclude your IVA early.

How will my credit rating be affected whilst in the IVA?
Once you have defaulted on your contractual payments, and received a default notice, this can be registered on your credit file. The default will show for a minimum of six years, so your credit rating is affected during the IVA and for a year after. The IVA is also registered on your credit file. Note that if someone checks your credit rating for another reason, such as a potential Landlord, your credit rating may become an issue.

Struggling With Payments FAQ’s

• Q. What happens if I miss a payment?
• Q. My pay day has changed so my contribution will be late – do I need to tell you?
• Q. I’m struggling to meet the monthly payment, what should I do?Q. What is a “Variation”?
• Q. Why would I need a Variation?
• Q. What happens if my Variation is rejected?
• Q. I have received a “Notice of Breach” – what does this mean?
• Q. What happens if I’ve missed payments or received a “Notice of Breach” and I can’t do anything about it?

What happens if I miss a payment?
IVA proposals often state that if you miss more than two payments over the duration of the IVA, then your Supervisor needs to take some action.

Missed contributions can happen for many reasons, some more avoidable than others. However telling us when a problem arises, as soon as possible, is vital. It gives you the best opportunity of keeping ‘on track’. If for any reason you can’t maintain monthly payments for a short period, we may be able to agree to give you time to catch up later with increased monthly contributions. If this is not possible, extending the term of the IVA may also be an option.

If problems are permanent, or there will be several missed payments, the IVA can sometimes be changed through what is known as a variation. This usually requires a change in circumstances and needs the agreement of your creditors. They will be reluctant to agree unless there is a significant change in your circumstances.

If you miss payments without our agreement, this can count as a default of the IVA – serious defaults result in the failure of the IVA which you should avoid – Remember always tell us as soon as you become aware that there could be a problem in making your monthly payments.

My pay day has changed so my contribution will be late – do I need to tell you?
Standing order mandates sometimes need to be amended due to salary dates changing, change in circumstances etc. However, your payments are due by specific dates agreed at the start of your IVA.

To avoid arrears, if you need to change your contribution date and are unsure how this will affect you contribution, then contact our Customer Enquiries team for advice.

I’m struggling to meet the monthly payment, what should I do?
If the situation is temporary then you may be allowed to make a reduced payment, with the difference being added to the end of the arrangement.

A permanent problem would mean your situation would need to be reviewed. With approval of your creditors, you may be able to “vary” your IVA to allow a lower monthly contribution (see 4 below).

In any case, if you have any difficulties with payments, tell us immediately so that we can advise you or even go back to your creditors with a variation to your original proposal.

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What is a “Variation”?
An IVA Variation is a revised offer to your creditors that takes account of a significant change in your circumstances. Your Supervisor first assesses whether or not a new offer should be made, and if one is appropriate then a member of our Repayment Plan Team will send you a draft proposal, for you to approve. It’s much easier and quicker than the initial proposal because we have much of the information we need already. A meeting will then be held with your creditors so they can vote on your revised proposal. As with the original proposal, more than 75% by value of creditors who vote, must agree to the changes. Our record in agreeing variations is 98%.

Why would I need a Variation?
No one can guarantee that their financial circumstances will stay the same throughout the term of an IVA. If your circumstances do change significantly a Variation might be best for both you and your creditors.

There are many possible reasons for a Variation, for example:

• Redundancy or Job loss
• Pregnancy / Maternity or Paternity Leave
• Sickness
• Separation from partner
• Rising costs in expenditure
• Decrease in income

If you find you can make a full and final offer, for example with funds from friends or family then this can also be put to your creditors.

Remember that any of the problems listed above are potentially serious, so contact our Customer Assistance team to discuss all your options.

What happens if my Variation is rejected?
Debt Free Direct has an excellent track record in getting creditors to agree to Variations to proposals (98%). However, in the very few cases where a Variation is rejected, and if we can’t agree on a compromise, the agreement will usually fail. Then you may want to consider a different debt solution, such as a debt management plan or bankruptcy. If the Variation is rejected but you want your IVA to continue, the original agreement will still apply.

I have received a “Notice of Breach” – what does this mean?
A ‘Notice of Breach’ is issued to you when a breach has occurred – a breach means you have failed to comply with the obligations set out in your proposal. Most often this is because more than 2 contributions have been missed. This notice is sent only to you and gives you full details of the problem.

You will usually have one month to explain why the breach has occurred and to suggest a solution. If you can provide a solution within that time, or provide an explanation, you may be able to continue the IVA or seek a Variation. If you don’t respond within the month, the IVA will fail. Your Supervisor would then issue a Certificate of Termination and may need to present a petition for your bankruptcy.

What happens if I’ve missed payments or received a “Notice of Breach” and I can’t do anything about it?
Once we receive all of the information showing your new position, we will advise on appropriate solutions. If you cannot meet your payments due to a change in circumstances, we will always strive to vary the arrangement, rather than failing it. We might ask the people you owe money to if they would agree to a reduced payment, or a payment holiday, via a Variation to the arrangement.

If no solution can be agreed, the IVA will fail and your creditors will no longer be bound by the arrangement. They may resume collection efforts and your Supervisor may have to petition for your bankruptcy.