Job and possessions - impact of an individual voluntary arrangement
Brexit - if the UK leaves the EU without a deal
If the UK leaves the EU without a deal, you might not be protected from creditors based in the EU if you then set up an Individual Voluntary Arrangement (IVA). If you go to live or work in the EU, your EU creditors will be able to chase you for debt. However, they won’t be able to chase you for debt if you go on holiday to an EU country.
If you have property or things like land, a car or savings in an EU country, you should get legal advice. Also get legal advice if you have creditors in Switzerland, Iceland or Norway because the situation is different in these countries.
An Individual Voluntary Arrangement (IVA) is a formal and legally-binding agreement between you and your creditors to pay back your debts over a period of time. An IVA must be set up by an insolvency practitioner.
An IVA can be flexible to suit your needs but it can be expensive and there are risks to consider.
This page tells you about how an IVA may impact your job, home or possessions.
Having an IVA will not usually affect your job. But if you are in certain professions, such as solicitors and accountants, having an IVA may mean that you can no longer practice, or may practice only subject to certain conditions. If you are worried about the impact of an IVA on your job, check the terms and conditions of your contract to see if it says anything about continuing to work when you have an IVA.
Everyday possessions such as items you use in your home are not affected by having an IVA.
However, if you own more expensive items, such as antiques or expensive jewelry, you may want to consider selling these to help pay your debts.
Assets are things you own that have significant value, such as a home, land or a car. You don’t need to have any particular assets to get an IVA but they may help you to pay your debts. Assets can be included in the IVA, which means you will sell them and use the money to pay the creditors.
If you are a homeowner, check the special rules about how your home is treated.
If you decide that an IVA is right for you, your insolvency practitioner will discuss your assets with you and whether these should be included in the IVA or whether you can keep them. You must tell the insolvency practitioner about all your assets. If you don’t, you will be breaking the law.
Any assets that you want to keep, such as a car, must be specifically excluded from the IVA. If you don't want to include an asset and the insolvency practitioner doesn't think the creditors will agree, the proposal won't be put forward.
Future income or assets
Having an IVA may affect any future income or assets that you receive. For example, if you decide to move house while you have an IVA, any money you make from the sale might have to be paid into the IVA.
If your income increases while you have an IVA, you have to declare it to your insolvency practitioner. If you don't, you could be breaking the law.
Most IVAs contain a windfall clause. A windfall is money you receive unexpectedly, for example, winning the lottery, inheriting a house or getting a large bonus payment. If your IVA has a windfall clause, you will have to pay any windfall money into your IVA.
If it’s likely you're going to receive an inheritance or large bonus or gift within the next five years, you should think carefully about whether an IVA is suitable for you.
Payment Protection Insurance (PPI) refunds received during the IVA
If at the time the IVA is being set up you are entitled to a PPI refund and you go ahead with an IVA, the PPI refund counts as an asset and any refund paid will be taken by the insolvency practitioner and paid into the IVA.