What can happen if I don’t go into an IVA?

What can happen if I don’t go into an IVA?

If you find yourself in debt it’s understandable that you’ll want to consider all your available options – and there are certainly quite a few to choose from.  Many people find that an IVA is an ideal solution since it means all your debts can be consolidated and simply repaid with one monthly installment – but best of all, it also means that your creditors can no longer pursue you legally (or even make any contact with you). As a government debt scheme, IVAs are the government’s ways of helping debtors get rid of their challenges. 

In this article, we look at what can happen if you’ve got debt but choose not to enter into a debt management solution, such as an IVA  is it worth it to go into an IVA?

What will happen if I choose to ignore my creditors?

If you’ve got yourself into debt then you can almost certainly guarantee that your creditors will get in touch with you sooner, rather than later – whether that’s via phone, email, correspondence or even a home visit.

Depending on the type of debt you have, there are various options available to your creditors, which can be used to write off debt, and these include the following: 

·       If you have unsecured debt (such as a credit card, utility bill or unsecured loan), they can issue legal proceedings against you for the outstanding amount.  This means that they’ll be able to take you to your local County Court for the outstanding amount, together with any legal costs they might incur, the Court issue fee (which will depend on the amount you owe) and any additional interest (charged under s.69 of the County Court Act 1984 for personal debts, or under the Late Payment of Commercial Debt (Interest) Act 1998 for business debts).  Once they’ve issued proceedings (and assuming you have no defence), they might then secure a County Court Judgment against you.  If this happens, then the Judgment will appear on your credit record for a period of 6 years and they can also ‘enforce’ it via various methods.  These methods might include bailiff action, an attachment of earnings order (whereby repayments are taken directly from your salary) or even a charging order (which can be secured against any property you own). 

·       If you owe Council Tax, then the same principles apply – and remember, if bailiffs are instructed then they can claim their costs directly from you and/or remove goods from your house for sale at auction. 

·       If you have mortgage arrears then your lender could take possession proceedings against you and have you evicted from your home, whilst they sell your property (to repay their outstanding liability).  Whilst most possession are ‘suspended’ (pending your ability to repay a set monthly amount) some can be made ‘forthwith’, which means you’ll have to leave your property and give it back to your lender.  Again, this can also incur substantial costs.

·       If you have substantial arrears, then your creditors can also apply to make you bankrupt.  For some job types (such as the armed forces, police, solicitors, and accountants) this can lead to instant dismissal – and consequently, more debt, if your regular income is taken away.


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