Do I Have To Declare An IVA After 6 Years?

Author Name Chris Richards Article date May 17, 2023

An IVA is exclusively accessible to England, Wales, and Northern Ireland residents. The financial consequences of entering into an Individual Voluntary Arrangement (IVA) are substantial, but for how long will it influence your financial decisions after completing the arrangement?

Looking to apply for an IVA?

Looking to apply for an IVA?

With various timeframes associated with an IVA, understanding its duration on your credit file and whether you need to disclose it when applying for additional credit products, such as a mortgage, can be challenging.

In this guide, IVA Helpline will clarify the long-term effects of entering into an IVA, enabling you to know precisely what to expect from your arrangement.

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What is an IVA?

In England and Wales, an Individual Voluntary Arrangement (IVA) serves as a legal contract between you and your creditors, enabling you to settle your unsecured debts through a series of monthly payments over a predetermined duration, typically five years.

An IVA must be overseen by a licensed Insolvency Practitioner (IP) from the Insolvency Practitioners Association, who will assess your financial circumstances and establish a feasible and affordable payment plan tailored to your needs.

Once your IVA proposal receives approval from your creditors, all interest and fees on your debts will be promptly frozen, and you will be safeguarded from further communication or intimidation by creditors and debt collectors.

Upon successfully completing the obligations specified in your IVA proposal and settling your debts, you will be officially recognised as debt-free, and your remaining balance will be discharged. Although the debt will not vanish, you will no longer be legally obligated to repay it.

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How long will an IVA stay on my credit file?

An IVA typically lasts for five years; however, it remains on your credit record for six years from the approval date. This duration applies even if you opt to repay your debt as a single lump sum, which generally takes about six months.

During this period, your credit rating will be significantly impacted, making obtaining additional credit, such as loans, mortgages, or even phone contracts difficult. It’s important to note that if your IVA encompasses multiple debts, they might appear separately on your credit report, even though they were repaid through the same agreement.

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Our trained advisors are here to help, so if you think an IVA proposal is one of the best debt solutions for you, don’t hesitate to call us on 0800 464 7235 to speak to one of our trained debt advisors or click below to see if you qualify…

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How will an IVA affect my credit score?

Undoubtedly, an Individual Voluntary Arrangement (IVA) can considerably affect your credit score for several years. While it demonstrates your commitment to making regular payments towards outstanding debts, it also indicates a history of missed payments and the possibility of future defaults.

This may cause lenders to question your ability to adhere to the terms of any subsequent agreements, labelling you as a high-risk borrower. Consequently, you may encounter difficulties obtaining loans, mortgages, or phone contracts, and higher interest rates are likely even if approved.

Despite most debt solutions impacting your credit score for up to six years, they can assist in clearing your debts, enhancing your credit standing, and fostering healthy financial habits that will benefit you lifelong.

For many, these advantages outweigh the temporary dip in credit score. At IVA Helpline, we understand the importance of addressing financial concerns and are here to support you throughout the process.

Do I still have to declare an IVA after six years?

While an IVA will be removed from your credit file after a six-year period, it may still be necessary to disclose it to potential lenders if you plan to apply for additional credit.

For instance, when filling out a mortgage application, providing information about your IVA is crucial, even if your lender does not specifically request it. This ensures they have a comprehensive understanding of your credit history, which aids them in determining your reliability as a borrower and the likelihood of you making timely monthly payments.

It might be tempting to omit details about your IVA when applying for credit after six years, but doing so is considered fraudulent and could jeopardise your chances of obtaining a mortgage.

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Can I get a mortgage after an IVA?

Upon completing an IVA, it’s natural to have concerns about your financial future. However, once your debt is repaid, there’s no obstacle preventing you from resuming your regular lifestyle and pursuing a mortgage if desired.

Keep in mind that finding a lender willing to approve a mortgage during or shortly after an IVA can be challenging. As a result, we at IVA Helpline and other financial experts advise beginning your search with a specialist mortgage broker.

These specialist lenders possess the expertise to assist individuals who are either in active IVAs or have recently exited them in securing a mortgage offer tailored to their specific financial circumstances.

It’s important to note that even if you obtain mortgage approval following an IVA, you might encounter higher interest rates or be obliged to provide a larger deposit. This serves to assure mortgage lenders of your commitment to making monthly payments and reducing the likelihood of default.

Do I have to declare an IVA to an employer?

In addition to informing a mortgage lender about your IVA, disclosing it to an employer after six years may be necessary, particularly if you work in the finance, law, property, or accountancy sectors. If you’re uncertain about whether to mention an IVA to a new employer, consider the following steps to determine the appropriate course of action:

  • Review your employment agreement
  • Schedule a meeting with a representative from the HR department
  • Contact your professional trade organisation
  • Consult with your trade union regarding the issue

We understand the importance of handling such matters with discretion and accuracy at IVA Helpline. If you have any concerns or questions, feel free to reach out to us for guidance.

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