In the United Kingdom, IVA is considered as a legal agreement. Based on the rules and terms, you, as well as the creditors, have to follow them and abide by them. A violation from either side will lead to problematic situations and legal implications. As a result, certain consequences breaching IVA will affect not only you but also the creditors too.
Most of the people have an idea that IVA will write off more than 70% of their debts. It is true, but disobeying the orders, rules and regulations will prohibit the breach of IVA to work out properly. Thus, after making an agreement with the IVA, you must keep up the pace of payments and contractual arrangements.
What can be Defined as a Breach of an IVA? The IVA Breach: A Brief Aspect
It’s important to note that your IVA won’t fail immediately when you violate the term(s) of your IVA proposal.
When you break the term(s) of your IVA, you will be sent a breach notice by your insolvency practitioner (IP).
A breach notification is a document that explains what you did to breach the terms of your IVA and what you can do to set things right. This could involve the following:
Obviously, consequences of an IVA will not fail, automatically. Somewhere, you might have violated any terms and conditions, and that is the reason why you also have to take care of the possible breaches to avoid any further problems in the future.
Do you really know what are the key aspects behind this breach? If not, then let’s get to know them, given below:
- Missing payments
- Getting involved in arrears of three months
- Not listening to the IVA personnel carefully
- Not mentioning the payment percentage of additional income
- Borrowing money without the IVA personnel’s permission
On the other hand, if you fail to provide the yearly detailed review to the breach of IVA, then it can lead to consequences breaching IVA. If this happens, then you have to deal, which can be indeed stressful.
Ignoring IVA Breach Notification?
If you have breached the IVA, then normally you will get a reminder from the IVA company. The remainder is known as breach notification. It is not an ethical way to deal with your debts. On avoiding the notification, you might get a call from the IVA organization.
Always try to settle down the matter as soon as possible. If you don’t take any actions, all by yourself, on the matter then it can lead to consequences breaching IVA. The agency can have a conversation with the creditors, and thus your IVA will be terminated.
What are the Consequences Breaching IVA?
On the violation of consequences of an IVA, you will receive a fixed duration of time for rectification. So, act quickly, as fast as possible. If you are unaware of its consequences, then here they are, as follows:
The Cancellation of IVA
If you are late to act accordingly after the IVA breach, then the IVA will be eventually cancelled. The IP (Insolvency Practitioner) has to conduct a meeting with the creditors forcefully. You will be in far more danger, with all the unpaid debts that are still remaining.
Worst Financial Circumstances
Whatever your financial situation is, it will eventually deteriorate. This is one of the worst consequences of breaching IVA. In this case, if you are having assets of your own, then selling it and re-paying might be the last remaining option.
Elimination of all the Facilities
The benefits and facilities that you are getting from the breach of IVA will come to a halt, at once. The creditors will get the ultimate opportunity to bother you day and night, and ask for the debt-repayment. The rate of interest will be decided by the creditors which might not be very overwhelming news for you.
An Unavoidable IVA Breach?
You might be wondering what will be your next step when the consequences of an IVA breach is unavoidable. Don’t worry, there is something you can do in iva debt advice critical situation:
- Contact your Insolvency Practitioner
- Make an amendment in the IVA terms and conditions
- Convince the creditors regarding the IVA failure
- Accept the IVA termination letter, gladly
- Further, consult with a Debt management expert
On getting the termination letter, check the remaining amount of money you have. Never hesitate to involve any of your assets to clear off the debts, as avoiding this can lead you to severe actions.
Other Possible Options
When the IVA fails, there are also some other options that can be considered. You can choose a Debt Management Plan from a reputed provider. Other than that, if any miscommunication takes place just because of the IP, then immediately inform the IVA personnel. If anything other than this happens, then positively inform the creditors and discuss with them, so that they can understand the entire situation.
How can You Maintain the Pace of IVA?
Leaving aside the consequences breaching IVA, there are several tactics that can help you in keeping track of the IVA. Here, the IVA supervisor or IVA personnel will play a major role. On facing a short term financial crisis, inform the supervisor for an emergency cost. The payment will be authorized officially under the rules of consequences of IVA.
If necessary changes are required in the running process of IVA, then always inform the supervisors. He/she will immediately contact the creditors and discuss the situation in detail. Upon their agreement or disagreement, the changes will be made by the former.
Not considering the consequences breaching IVA, it is not possible to avoid the situation at any cost. Thus, the permanent termination of IVA will never happen. Always keep contact with your hired IP, if you get trapped in a difficult financial situation. An IP is the only person who can free you from this debt. So, for clearing all the debts, it is better to listen to the valuable advice given by the IP, as well as the IVA supervisor.
Get free, impartial National debt advice online, so we can recommend the best solution for your situation. For free, confidential help with individual voluntary arrangements, you can also speak to one of our expert debt advisors. If you already have an IVA, you should always discuss your situation with your insolvency practitioner first.