Life After an IVA – What Happens After IVA Completion?
What happens when you have made all your monthly payments and the IVA is completed is frequently neglected, yet it is a very important matter. Prepare now for your new debt free financial future.
After successfully completing your Individual Voluntary Arrangement and paying off all unsecured debt, you might find yourself wondering what will happen next.
Await Your Certificate of Completion
Upon completion of your IVA, you will be given a Certificate of Completion by your Insolvency Practitioner. Your creditors will also be notified that the process is finished. The IVA completion certificate is then sent to the Insolvency Service so that your details can be removed from the individual insolvency register (usually within 90 days) which can be viewed here.
Now You Celebrate Your Financial Freedom
When your Individual Voluntary Arrangement is finished, you’ve reached financial independence by repaying your unsecured debts through it. You have reclaimed control of your finances and achieved financial freedom once again by paying off your debt using an IVA. With that in mind, go crazy with your money! To begin with, let’s rejoice that you completed your IVA course!
After being cautious with money for the past few years while staying within a stringent budget, it’s time to celebrate. This doesn’t have to be a costly major party. Instead, choose something more feasible such as drinks with friends or a meal with family. Make certain that whatever you do to commemorate this occasion is unforgettable!
Time to Check Your Credit File
Your IVA will stay on your credit file for six years from the date the IVA started. If you were in a 6-year IVA, it may be as soon as you make your final payment. For a standard 5-year IVA, it could take up to 12 months after your agreement ends . The reference agencies will update their records during this time to show that your IVA has completed.
You can look at your credit report before your IVA is completed to see if any of the default dates recorded by your creditors are later than the date you received approval for your IVA.
Contact any creditor if they show a default date which is dated after the date the IVA was approved. In order to update your credit report, you must provide evidence of the approval date. This ensures that the negative information from your credit reports are removed no later than the end of the IVA period.
Only your creditors can update your credit file, only your creditors can – Once your IVA is completed, you and all of your creditors will be given a final report that should trigger the credit update. It’s understandable that you would want to see an improvement on your credit score after going through an IVA, so keep an eye on it and check for any changes.
If you have difficulties with any of your creditors not keeping their records up to date with the reference agencies, contact the creditor first and resolve the issue.
If you’re having trouble updating your files, get a copy of your ‘Certificate of completion’ and send it to the Credit Reference Agencies (CRA). They’ll update their records showing that your IVA was successfully completed, which might improve your credit score.
The three main CRA’s are:
- Experian
- Transunion
- Equifax
Stick to the IVA Budget After it has Completed
Every penny is accounted for in an IVA, and any disposable income is put toward your agreement. You now have that amount of money to spend however you choose at the end of each month. Please be careful not to fall into traps set by bad financial habits; we want you to succeed with your newfound economic flexibility and not have to speak with you again in the future years.
Is there anything else an IVA can do for you besides help you get out of debt? Teach you how to manage your money so that you may save for those larger things in the future. A new car, a holiday, or a deposit on your next home?
You don’t need this money to survive; you’ve managed before and can do it again. Use phone applications to create a budget, track spending and set savings goals. This will help you make more informed decisions about your finances. Set yourself savings goals.
Tips on Rebuilding Your Credit Rating
After you finish your Individual Voluntary Arrangement, obtaining credit will be difficult. sI’s best to wait a few months before applying for a credit building credit card or borrowing money. When lenders do any hard credit checks, it affects your credit rating and credit score. It will also affect your short term ability to obtain any credit.
Aim to spend less than 25% of the amount you’re given (or, in the worst scenario, beneath half of your total credit limit) to stay on track with good borrowing practices. A practical strategy would be to spend token amounts each month. Fill up a car, then pay off the balance in full each month not to incur any interest charges.
Mortgage after an IVA – Is it Possible?
After the IVA is finished, your eligibility for a mortgage will improve. This holds true whether you’re looking to buy a new house or remortgage to gain equity from your current home.
Because you’ve been in an Arrangement, approaching conventional High Street mortgage lenders may be more difficult. Many lenders will demand that your IVA have been completed for at least three years.
The mortgage industry has evolved such that the longer you wait to apply after your IVA, the better deal you’re likely to get. If you were to apply immediately, a deposit of 15-20% would be standard; however, if you wait at least six years or more from the date your IVA started this percentage could drop as low 5%. Keep in mind that generally speaking, the bigger your deposit is–the greater chance you have at securing a favorable mortgage deal.
Your best bet would be to consult with a mortgage broker who has successfully helped former IVA clients work with lenders more understanding of their situation. This could include getting a competitive rate from a high street lender.
Set Yourself Towards Savings For Your Future Goals
It’s a fantastic idea to have some money set aside for a rainy day or for a high-value objective. This is simple to accomplish after your IVA has finished by putting aside a little amount of money each week or month that you were previously paying towards your IVA.
When you set up a standing order with your bank to automatically transfer money into your savings account after you receive regular income, saving becomes much easier. This way, you don’t have to worry about putting money aside each month manually–the process will happen automatically. Plus, by doing this little by little, you won’t even notice the amounts adding up over time!
My IVA Has Failed, What Can I Do?
If you are unable to maintain your IVA payments then the Arrangement may fail. The debt remains outstanding after the IVA has been terminated.
Failure of an IVA can occur for a variety of reasons, with the majority being due to significant arrears accumulation without any explanation. Alternatively, failing to disclose important assets such as a home during the start-up phase of your IVA. Another cause is non-cooperation with the obligations of completing and reopening your income and expenditure projections on an annual basis.
During the duration of your IVA, your situation might alter. Your earnings may fall or your expenditures rise more than any increase in income. Keep the IVA on course through a number of revised terms.
Alternative Solutions
However, if IVA failure is unavoidable, you will have to look for an alternative debt solution. If that’s the case, you may want to enter a new IVA (if viable) by contacting an insolvency practitioner or starting a Debt Management Plan through a debt charity such as Step Change. Other options include going bankrupt or entering a DRO (Debt Relief Order).
If your IVA is no longer the best solution for you, you can cancel payments and request to have the IVA failed. From there, you’ll be in control of managing your outstanding debts.
Contact your Insolvency Practitioner If You Have Any More Questions
Have you questions about your post-IVA life or wish to discuss your debt problems. Contact a debt advice company or a licensed insolvency practitioner. Licensed by a regulatory board to seek further advice and guidance.
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