Once your IVA is completed you will be free of your unsecured debt. Nevertheless you may still be affected by the Arrangement for some time to come.
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Mortgage after an IVA
Once your IVA is completed it is possible to get a mortgage. This is the case whether you want to purchase a new home or remortgage to release equity from your current property.
Because you have been in the Arrangement it is unlikely that the standard High Street mortgage lenders will want to help. As such you will need to use a specialist broker.
The longer you are prepared to wait before you apply the better mortgage deal you are likely to get. Generally speaking if you apply immediately you will need a deposit of 15%-20%. However if you wait for 6 years from date your IVA started this can reduce to just 5%.
Repairing your credit rating after an IVA
Your Credit Rating will not be normal as soon as your IVA is completed. A record of the Arrangement will remain on your Credit File for 6 years from the start date.
However even after this time your credit rating will not automatically change to excellent. One of the reasons for this is that you will have no history of responsible credit usage on the file.
One way to resolve this issue is use a credit facility such as a credit repair credit card. Using the card for every day expenses such as shopping and paying it off in full every month will improve your credit rating significantly.
The record of your IVA will come off your Credit File 6 years after the start date of the Arrangement.
Options if your IVA has failed
If you are unable to maintain your IVA payments the Arrangement may fail. If this happens your debts may remain outstanding (depending on how much you paid).
You will then have to make alternative arrangements to manage your debts. You have the option of starting a Debt Management Plan, going Bankrupt or even starting a new IVA.
If having started an IVA you decide that it is no longer the right solution you can allow it to fail. You simply cancel the agreed payments and ask your IVA company to fail it. You will then be in control of how to manage your outstanding debts from that time on.
If your income falls or living expenses increase during your IVA it might be possible to reduce your payments. However as a result the term of the Arrangement could be extended.
Government advice about Dealing with Debt
As well as the information found on this website the Government’s Insolvency Service has produced a useful guide to personal debt solutions which you might also find useful: “Options for paying off your debts”.
The Money Advice Service (MAS) are an independent service set up by the Government to provide people with free advice about all aspects of personal finances. For help from MAS if you are struggling with debt please follow this link: MAS – Help if you are struggling with debt.
It is also recommended that you read this one page document produced by MAS entitled “Dealing with debt – 5 things you should know”.