Of the many questions that we are asked regarding IVAs and the processes involved with IVAs, the question of what happens when the IVA finishes is often overlooked, but we feel it is of real importance.
We feel that with the sheer amount of information needing to be digested in setting up of an IVA, it isn’t until later that these questions begins to surface.
And, when you are able to take a moment, you may find yourself trying to find out exactly what happens at the end of your IVA - when all the dust has settled and the IVA has been completed successfully.
So - what does happen when your IVA reaches a satisfactory conclusion?
Does it really make you debt free?
Will it be the end of your financial worries?
Will you ever be able to get credit again?
(Take this link to our article about how an IVA effects your credit rating)
Well, to put it quite simply, YES!
There’s no doubt that at sometime during the early stages of your IVA, you’ll feel that you’ll be repaying your debts forever, but this will pass as you become accustomed to living within the confines of an IVA’s budget and the prospects of reaching the end of the IVA grows stronger.
And, often, it helps to focus on the fact that, once you successfully complete your IVA, your creditors will have no choice but to legally write-off any unpaid debt.
Guaranteed, you will be debt free.
This means that the money you have been paying into the IVA will now be yours to spend on exactly what you like. You will have money in excess of your needs, which, of course, means financial freedom.
Once you are free of your debt you’ll get a fresh start. For the first time in years you’ll be living within a balanced budget, but now with an excess of money each month, money which had been going towards the IVA.
For some people the need to reach out for credit again will be unnecessary, indeed, the thought of doing so might seem quite alien.
Take this link to read about learning to live without credit.
Rebuilding your Credit Rating
However, if you wanted to return to spending money on credit you will have to begin the process of rebuilding your credit rating. Here is a brief explanation of what you can expect to happen and the actions you need to take.
On the successful completion of your IVA, your Insolvency Practitioner (IP) will issue you with a ‘Certificate of Completion’. This will arrive after your IVA payments have come to an end and the IP is satisfied you have met with all your legal obligations under the IVA. The IP will, as part of their final duties, pass a copy of your Certificate of Completion to the Insolvency Service so that they can update their records and remove your name from the Insolvency Register.
Your creditors will be informed of your successful completion of your IVA by your IP as well, so you will not be required to contact them.
It is in your interests for you to send a copy of your ‘Certificate of Completion’ to all the Credit Reference Agencies (CRA), to enable them to update their records and show that your IVA has been completed successfully.
The main CRA’s are:
You should also take a look at the Insolvency Register 3 months after you have completed your IVA, to ensure your name has been automatically removed. If it hasn’t, you cant notify the Insolvency Service by clicking the ‘report an error’ link at the foot of the page containing the details of your case.
It will take some time for your credit rating to rebuild, during which time obtaining credit may be difficult, however, as time moves on getting credit will become easier.
My IVA Adviser strongly recommend you resist the temptation of entering into another credit agreement as soon as your IVA has completed. We believe you should take time to adjust to your financial situation and the benefit of having no unsecured debt or no IVA payment to make. If you do want to take credit, make sure you have calculated exactly what payments you can actually afford to make with your repayments. If you are in doubt, seek advice from an ‘Independent’ Financial Adviser.
If you would like to discuss this or any of your personal circumstances with one of our specialist IVA specialist advisers, just call 0800 088 7503 for free, anytime.
For a full explanation of the IVA Process click here.