Decision Criteria	Pros / Advantages	Cons / Disadvantages
Legal jurisdictions?	An IVA will work in England & Wales and Northern Ireland. In Scotland the equivalent debt solution is a Protected Trust Deed	There are slight differences in the process between England & Wales and Northern Ireland. These will be explained.
Flexibility?	Since the introduction of the IVA Protocol it has been more straightforward to vary the terms of an IVA based upon changes in circumstances. This includes the provision for a 6 month payment holiday and reasonable variations in contributions without needing to reconvene a meeting of your creditors.	An IVA is structured to be a formal debt solution over a fixed period of time. There is flexibility to extend the duration of an IVA, but this may require reconvening a meeting of your creditors.
My home at risk?	It is increasingly common that an additional period is added to your IVA to increase creditor contributions rather than requiring you to release equity in your home.	The equity in your home will be taken into consideration and there may be a requirement to release equity in the fifth year of your IVA, though this is fairly rare.
My credit rating?	It is our experience that most clients we see have already fallen into arrears with one or more of their creditors and their credit rating is reduced and their credit file has detrimental information reported. An IVA record on your credit file shows you have taken a responsible attitude to repaying your debts and that you do not want to attract credit marketing by other lenders whilst repaying your debts. After 6 years the defaulted unsecured credit agreements that form part of your IVA will be deleted from your credit. Your payment history on your current account and other accounts like your telephony accounts, utility accounts and mortgage should all show payments up-to-date and positive payment history.	An IVA is entered on a public register which can be found at: www.insolvencydirect.bis.gov.uk/eiir/ Whilst on an IVA and for a year after completing it your credit rating will be affected - an IVA may last 5 years but the effect on your credit rating will last 6 years and potentially longer if the term of your IVA is extended You should not be able to obtain meaningful unsecured credit for a period of 6 years whilst on an IVA. Creditor reporting can be very inconsistent whilst on an IVA. We offer you access to your credit file through the term of the IVA to ensure that it is being properly reported.
Creditors contact?	We undertake all correspondence and negotiation with your creditors. We have an excellent relationship with the majority of creditors for a range of debt solutions. We use industry standards statements and figures for presenting your household budget and payment offers to your creditors. All legal action is suspended once the IVA proposal is approved by the creditors bound by the IVA proposal.	Your creditors will continue to send statements and notices to you as required by the Consumer Credit Act. These should not be confused with debt recovery communications. Legal notices should not be ignored and we do need to be notified of balance updates or statements showing interest or charges being applied to your accounts.
Effect on employment?	Generally none.	Some specialist types of employment are impacted and this extends to company directors.
Minimum or maximum amount of debt?	Generally, a minimum of £12,000 of unsecured debt with at least 2 creditors and 3 lines of credit. There is no upper limit on the amount of debt, though the available disposable income will be a major consideration so that the IVA is both affordable and will provide an acceptable return to your creditors when compared with other debt solutions, like bankruptcy.	Bankruptcy may become a consideration where there high levels of unsecured debts and potentially high levels of secured borrowing that cannot be serviced and there are insufficient assets to be realised to present a workable proposal to your creditors.
Duration to repay?	The norm is 5 years, however, the duration may be varied by your creditors and if there is a home or other assets involved then these may influence the duration of the IVA. These can have the effect of shortening the IVA in the case of a full & final proposal after equity release or extending the IVA in the event that no equity from the property is released	The length can extended if your circumstances deteriorate and we have to reduce the repayment offer to your creditors below an agreed threshold. Conversely, if your circumstances improve then we may increase the amount paid to your creditors. This is always formally communicated to you.

Clifford Watts uses the Standard Financial Statement (SFS), a recognised set of budgeting guidelines, to complete your financial statement, generally referred to as a statement-of-affairs. All unusual expenditure items and assets will be explained in this statement. Part of the Clifford Watts approach is to assess ways of reducing costs and ways of saving money.

We need to establish that there is a budget surplus that is less than the sum of your contractual payments, if you are still making these. It is our experience that the majority of clients that we see or speak to haven’t been paying even minimum contractual payments on all of their credit agreements for some time. You may even have arrears on priority creditors like you mortgage, rent, council tax or utilities. These will need to be taken into consideration as part of initial review.

Clifford Watts will take reasonable steps to ensure that you include information about all of your debts (both secured and unsecured) and assets when we assess your income and expenditure. Your credit report greatly assists this process and also accurately establishes the relationship with each creditor prior to entering an IVA.

The budgeting process will also generally identify your entitlement to any means tested and non-means tested benefits. Some benefits like Disability Living Allowance (DLA) and Attendance Allowance (AA) form part of our vulnerable client policy. Some income can only be used after careful consideration as to whether it is in your best interests to do so.

The information that we gather forms the basis of the IVA Proposal to your creditors.

What are the costs of proposing an IVA?

The costs of proposing and administering an IVA have to be agreed by you and your creditors. These costs are usually drawn down from the monies you pay into the IVA, and it would be unusual for you to be asked to pay anything prior to your IVA proposal being finalised.

Nominee Fee

The nominee fee is a fixed fee and covers the work we and Melanie Giles undertake in setting up your IVA proposal to your creditors. There is no charge for the debt advice provided before our appointment as your nominee.

• Provide you with advice regarding the range of solutions available to you
• Gather up all of the documents we need to confirm your financial position
• Liaise directly with your creditors with regard to your repayment proposals
• Assist you with opening a new bank account should this be required
• Prepare your IVA proposals and present these to creditors
• Convene and chair your creditors meeting

The nominee fee charged by our Insolvency Practitioner is likely to be in the range of £750 to £2,500, with an average of £1,600.

The Insolvency Practitioner will be paid the nominee fee out of the payments you make into the IVA and these will not be paid to your creditors, so that your credit agreements that are part of the IVA will go into further arrears. The creditors are bound by the IVA proposal once approved provided that you maintain agreed payments to us.

Once your IVA has been accepted, our role then changes from Nominee to Supervisor.

Supervisor’s Fee

The supervisor’s fee covers the on-going administration of the IVA, disbursement of contributions to your creditors and any reviews that are required, including an annual review. The supervisor has reasonable discretion where your circumstances change without going back to your creditors and this may affect the contributions and fees.

The calculation of the supervisor's costs and fees will depend on the proposal and is therefore subject to your individual circumstances. Wherever possible our Insolvency Practitioner's follows the IVA Protocol, an agreed approach with the major lenders, where the supervisor’s fee will usually be 15% of your monthly or quarterly payment. For employed or retired people it will be normal for contributions to be made monthly. For the self-employed there may be flexibility in payments to allow for invoice payments by their customers. Your creditors will agree these supervisory fees with the Insolvency Practitioner and they will be deducted from the money you pay the Insolvency Practitioner for distribution to your creditors.

Our supervisory fees generally range from £360 to £1,000 per annum and these are drawn from the monies you introduce into the IVA with the agreement of your creditors.

A part of our role as your IVA supervisor we will:

• Collect your contributions into a unique bank account held in your name, protecting your funds
• Agree all your creditor claims
• Distribute the monies held to creditors usually at quarterly intervals
• Assist you with on-going reviews, notably where PPI reclaims may be relevant
• Review your circumstances at least once per year, and more often if you run into difficulties
• Assist you in presenting any variation proposals to your creditors
• Assess the impact of your IVA on your credit file before, during and after your IVA reaches completion
• Conclude your case at the end of its terms and issue you with a Completion Certificate

Where you are a homeowner, there may be a requirement to make contributions for a sixth year rather than release equity from your property. A supervisory fee will be applicable on any contributions in the extended term of the IVA.

IVA Illustration

Employed tenant, married (no dependents) in their late thirties with total unsecured debts of £24,927 with 7 creditors and liabilities exceed assets.
Monthly contributions (60 months @ £270 = disposable income)		£16,200
Insolvency Practitioner fees are taken from the monthly contribution of £270
Less:
Nominee Fee	£1,350
Supervisor's Fee over IVA Term	£2,228
Costs	£350
Total Costs		£3,928
Net funds available to 7 unsecured creditors		£12,272
Dividend to unsecured creditors		49 pence in the pound (£)
Dividend in Bankruptcy		Nil

If your IVA fails

If your IVA fails, meaning your Insolvency Practitioner formally defaults the IVA, then you will remain liable for the balance of your debt and any of our fees and costs already incurred.