Thinking of entering into an Individual Voluntary Arrangement (IVA) to get rid of your debts needs some significant considerations. If you get an IVA without proper IVA advice, you won’t know how an IVA affects employment, your home, your credit ratings, your future financial prospects, etc. At StepChange, the debt advisor will provide you with a better understanding of this context.
Common questions that people have when applying for an IVA is if IVA affects employment prospects. Suppose they have to inform their employer of their IVA. You must be clear about these aspects before entering into an IVA. Knowing how IVA will affect your job and employment opportunities will enable you to set up a reasonable IVA debt repayment plan and monthly payment amount. That is why it is advised to get IVA advice to know the limitations of your job possibilities.
Fortunately, you would be relieved to know that an IVA does not necessarily affect all jobs but with some crucial exceptions. In sporadic cases, you may find IVA affects employment. Some exceptional jobs have specific employment codes that forbid the individual from getting an IVA or filing for bankruptcy. Such professions include accountants and lawyers.
If you think that your job permits you to get an IVA, you can validate by checking your employment contract or get IVA help by calling the Stepchange. If the debt advisor suggests you apply for another debt measure, the IVA will likely affect your employment. If IVA effects work, you cannot earn a regular income and cannot make monthly IVA repayments. While getting out of problem debts is essential, it does not ask you to lose your job, right!
Effect of IVA on your current employment
With the majority of the job professions, IVA has no significant impact on your current employment. However, there are exceptions to a few jobs. If you work in any of the following industries, you might notice how an IVA affects employment. Those professions include:
- Financial services
- Legal services
- Property conveyancing
If your job role relates to these industries, IVA will affect your employment prospects. Planning to get an IVA when you are in these professions means that you might even lose your job. Or your job roles will be restricted by some conditions in an IVA. Nevertheless, to know if an IVA is the right choice and does not affect your employment, IVA advice is necessary.
While certain professions have strict restrictions to enter into an IVA, the risks vary with the job roles. If you are unsure about your job role and if IVA affects employment, you can check about the same by:
- Verify your employment contract’s terms and conditions regarding getting an individual voluntary arrangement (IVA).
- Talk with your superiors or HR manager in private about if an IVA puts your employment at risk.
- Understand the various effects of IVA on employment by talking to a professional body or trade union.
These will enable you to know if your job is safe from the IVA effects or if you can get an IVA with your current job.
IVA and self-employed
Supose you are a self-employed individual. In that case, you can readily enter into an IVA and can carry on your business or trades while making regular payments towards IVA. As a self-employed individual with an IVA, it is no burden on you to control your business. For a successful self-employed IVA, you need to provide the creditors with genuine proof of your trading. The creditors and the IP will assess your financial accounts and accordingly propose a debt repayment plan.
An individual voluntary arrangement (IVA) is, in fact, a better option than bankruptcy when you want to clear off your debts out of your self-employed earnings. Contact the StepChange debt charity number to understand the scopes of IVA when you are self-employed.
In an IVA, you are to make a reasonable payment offer to the creditors. This repayment plan could be a lump sum payment, monthly minimum payment, or both. So, as long as you can make a reasonable payment offer, the IVA won’t affect your employment, self-employed or employed. But to be sure about your IVA choice among all the other debt solutions to handle your debts.
IVA and future employment prospects
Depending on the job category, the IVA will affect your employment. Although rare, employers might check your credit history when you apply for a new job. If your credit report is poor, some employers might not consider you for a specific job role. So, you see, it is worth noting that an IVA influences your future employment prospects.
As much as your credit history affects the employers’ preference, the type of job role is the vital element here. If you are looking for finance-related jobs, be upfront with your IVA record.
Most job roles do not have stringent financial procedures, which can be affected by an IVA. But, job roles like an accountant, solicitor, police, prison service, and fire service do have some fiscal responsibility. An IVA affects employment when the job involves critical finance matters. Credit checks have become a part of the job procedure. Anyhow, the type of job influences the effect of IVA on employment.
What impact does an IVA have on your current job?
In most cases, filing an IVA will not jeopardise your career. However, there are a few occupations where your job may be jeopardised.
Accountancy, law, and financial services, such as banking, are the most common. However, not all occupations in these fields will preclude you from entering an IVA – many persons in these industries can still propose an IVA.
If you are unsure whether an IVA may affect your career, check with your employer and review your employment contract as well as the rules of any professional affiliations you may have.
What if I lose my job after establishing an IVA?
If your financial circumstances change, for example, if you lose your job, you may be entitled to request a payment break of up to 9 months, or ask your creditors to enable you to suspend your monthly IVA payments until you find another work, depending on the terms of your IVA.
IVAs can be extremely flexible, but it is critical to notify your Supervisor of any changes in circumstances as soon as possible so that they can go over your alternatives with you.
IVA and employer
There is no legal requirement that you notify your employer about your IVA. Unless otherwise specified in your employment contract, you are not legally required to notify your employer. However, if your job contract states differently, you must notify your employer directly. An employer can only discover about your IVA by doing financial checks and searching the Insolvency Register. It is, however, uncommon. Your IVA is a private agreement between you and your creditors, and unless they are one of your creditors, your employer will be kept in the dark.
In contrast to a bankruptcy, your employer may become aware of your bankruptcy if HMRC wishes to notify you of a change in your tax code.
If you have an IVA, you do not need to provide this form of notification because you will continue to pay your regular tax contributions as previously.
During the application process, you will be requested to provide the name and address of your current employer, as well as some of your most recent pay stubs.
The Insolvency Practitioner will need this information to verify that you have been in regular employment and to authenticate your income figures.
This information, however, is exclusively used for that purpose, and no communication with your employer is made for any reason at any time throughout the IVA.
What happens to my other aspects if I enter into an IVA?
An individual voluntary arrangement, or IVA, is a debt solution that entails a legally enforceable agreement between you and your creditors to adhere to a lower payment plan over a longer period of time.
An IVA can be quite beneficial if utilised correctly, but it’s important to consider the potential impacts on your assets, property, and employment before taking one out.
If you are a homeowner and wish to enter into an IVA, the insolvency practitioner presiding over your case will almost certainly require you to have your property valued.
This is done to see whether there is any remaining equity in your home that can be cashed in and used to pay off your debts.
Equity is the cash value of your property after all secured debts, such as mortgages, have been paid off. If you have a mortgage on your home and its value rises, you can refinance it to release the equity that has been built up.
If your IP determines after the valuation that there is enough equity in your property to warrant remortgaging, you will be compelled to do so in order to acquire funds to begin repaying what you owe.
There is no official obligation that you include any of your assets in your IVA. You may decide, however, that it is worthwhile to sell any assets with a decent enough resale value in order to obtain a little extra income to put towards debt payments.
When the IVA is set up, your IP will assist you in figuring out all of this and may suggest you to sell specific things. You must manually exclude any assets that you wish to maintain from the IVA agreement.
Importantly, you will never be asked to give up any goods deemed necessary for daily living, such as clothing, furniture, and cooking equipment.
IVA on family
What will my duty status be if IVA has an impact on my family?
Will I Be Able to Contribute to My Household Needs, or Will My Spouse Have to Handle Everything?
So you can still contribute to the household’s wants and requirements!
As a result, when you first consider the IVA, your IP will sit down with you and create a comprehensive plan, inquiring about your debts, your partner’s income, your income, and your household’s routine expenses.
As a result, your IP will take your and your spouse’s contributions to living expenses into account and make the IVA payment accordingly.
Your participation in the family is now considered for, and you won’t have to be concerned about what your spouse has in order to cover all of the household’s basic living expenditures on their own.
You may be wondering if the IVA has any effect on your credit score. And how will they affect my spouse’s credit history?
IVAs, on the other hand, have a significant negative influence on the credit score of the person who has taken out the IVA.
In addition, the IVA will affect your credit score for 5 to 6 years. So, even if the IVA expires in 5 years, it is correct. As a result, your creditworthiness will be severely hampered for the next six years.
It not only appears on your credit record, but it also precludes you from obtaining any type of credit. Furthermore, IVA has a positive impact on the family. For example, you may be unable to acquire a job because you are unable to secure a specific location to rent as a result of it.
Typically, some people may have this query. Is IVA going to have an impact on my job? . Only if they work as an insolvency practitioner, accountant, or banker will IVA have a significant impact on their career. In the majority of these cases, it isn’t a problem as long as you acquire permission from your manager. What employer wouldn’t want its employee to avoid bankruptcy if they take reasonable precautions?
Income and assets in the future
If your income rises throughout the course of your IVA, you must notify your IP, who may change your payment plan accordingly.
Most IVAs have a windfall clause, which states that any money or assets received unexpectedly during an IVA may have to be used to make repayments. This covers things like lottery winnings, inheritance, and any work bonuses.
All in all, the possibility of an IVA affecting your employment is minimal unless mentioned in the employment contract. If so, you must not hide your IVA from the employer to prevent job suspension or other harmful effects. Also, losing your job when your IVA is active does not necessarily fail your IVA. the IVA won’t fail as long as you keep making regular IVA repayments.
Regardless, getting good StepChange debt charity IVA advice is recommended to know if IVA affects employment.