Will an IVA stop creditor phone calls?

Here at MY IVA Adviser, we are constantly being asked 'Will an IVA stop creditor phone calls?.

Let's face it, the stress of having to deal with creditor phone calls is one of the most unpleasant aspects of being in debt. For many people, the thought of having to explain to creditors why they're unable to maintain their payments is sickening.

So, will an IVA stop creditor phone calls? And, if so, how quickly?

Creditors' Reactions To Your IVA

The amount of contact you'll experience with your creditors will be dependent on how long it has been since you last paid them and on the size of debt you have.

If you're up-to-date with your monthly payments at the time of your IVA application, the chances are that your creditors will be unaware of your financial difficulties until they're notified of your intentions to propose an IVA, and that normally takes 2 to 3 weeks.

But, if you're already in arrears at the time you make your IVA application you'll probably have received some sort of creditor contact already.

Limited exposure

Unfortunately, there's nothing to stop your creditors from contacting you during the initial stages of the IVA application, in fact, they have the right to do so. This might lead you to feeling exposed during the initial stages of the IVA application.

But, even though creditors have the right to contact you at this stage, most creditors nowadays understand the IVA process and, once they've been made aware of your intentions, they'll be keen to make direct contact with your IP.

Token payments

Occasionally, a creditor or Debt Collection Agency will be less interested in your plans to enter an IVA and be more driven to extracting an interim payment from you. They might even threaten to reject the IVA unless you give them a payment there and then.

If this happens you should try to make a 'token payment'. A token payment is a small payment, based on a fair share of your affordability.

For example If you know your IVA payment is expected to be around £200 and a creditor is demanding a payment from you, simply offer them a fair share of the £200. A fair share would be a similar ratio of the £200 as the ratio they hold of your total debt. So, if they are owed half of your over all debt, then offer them £100, owed a quarter, then offer £50 and so on.

After the Creditors' Meeting

After the successful outcome of your Creditors' Meeting, everything changes.

Under the terms of your IVA, creditors are no longer allowed to contact you in pursuit of payments to debts included in the IVA.

If a creditor does continue to contact you after your IVA has been agreed, it normally only takes a single call to your Insolvency Practitioner to put a stop to the contact.

Once the IVA has been accepted by the necessary majority, the terms of the IVA are binding on all creditors, even those that voted against it, which means continued contact is a breach of creditors legal obligations.

Creditors can contact you for other purposes, such as advertising, but must not attempt to extract a payment from you.

Forward your correspondence

Once your IVA has begun, the best action is to forward any future correspondence you receive to your Insolvency Practice, or inform them when a creditors refuses to break direct contact.

Quite often the creditor's systems have not been updated properly or are slow to update so your IP will take steps to bring the creditor into line.

Professional IVA Advice

If you are worried about a serious debt problem and feel you'd like to have a chat with a professional debt adviser, then please call 0800 088 7503. You call will be treated with the strictest confidence and we will do all we can to assist you..

Alternatively, simply complete this form and on of our professional advisers will contact you at your preferred time.

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In accordance with the Financial Conduct Authority's guidance, please follow this link if you would like to read a free guide about In Debt - Dealing with your creditors
To find out more about managing your money and getting free debt advice, visit Money Advice Service , an independent service set up to help people manage their money.

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