Legal action may be taken against you to recover debt that you owe. An IVA will protect you from this and overturn action that has already taken place.
- Will an IVA stop creditors taking Legal Action?
- Is your Home protected?
- What if a CCJ or Wage Attachment is already in place?
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Will an IVA stop creditors taking Legal Action against you?
If you are unable to pay your debts legal action may be taken against you to recover what you owe. The first step a creditor might take is to apply for a CCJ (County Court Judgment).
Once a CCJ is issued if you still do not pay your debt additional action can be taken. This might include applying for an Attachment of Earnings so payments come directly from your wages. Alternatively a Bailiff could be used or an application made for your bankruptcy.
An IVA prevents these things from happening. Once the Arrangement is in place you are legally protected from the included creditors. No further legal action can be started against you.
If one of your creditors has already instructed a Bailiff their actions must cease once your IVA is in place.
Is your Home protected from Legal Action by an IVA?
If you are a home owner your creditors can take legal action against your property to recover their debt. Once a CCJ has been issued they can then automatically apply for a Charging Order against your home.
A Charging Order secures the associated debt to your property. As a result if and when you chose to sell the debt must be paid in full out of the available equity. If there is no equity the sale could be blocked.
Once you start an IVA your creditors are no longer able to apply for a Charging Order. In this way the Arrangement gives legal protection for your property as well as you personally.
Debts that have already been secured against your home can not be included in an IVA. A provision to maintain reasonable payments towards these should be included in your living expenses budget.
What if a CCJ or Wage Attachment is already in place against you?
Once an IVA is in place legal action currently being taken against you must stop. If any of your creditors is in the process of applying for a CCJ, Attachment of Earnings or even petitioning for your bankruptcy this action will cease.
In addition any CCJs or Attachment of Earnings that have already issued against you by creditors included in the agreement are overturned.
If you are currently making payments towards a CCJ or money is being taken from your wages this must stop. Going forward you will only have to make your agreed IVA payment.
A creditor who is applying for a Charging Order against your home may have already secured an Interim Charge. If this is the case it is unlikely that applying for an IVA will prevent the Charge being issued.