If you are struggling with debt it is possible that one or more of you creditors will threaten you with legal action. By this they first mean applying for a County Court Judgement (CCJ) against you.

If a CCJ is granted by the court and you still do not pay your debt the person you owe money to can then decide to take further action such as applying for an attachment of earnings so that money is deducted directly from your wages. If you are a home owner they could also apply for a charging order against your property in affect securing the debt.

In extreme cases particularly where you owe tax or VAT arrears HMRC may apply to the court to make you Bankrupt. We explain how you can prevent this legal action with an Individual Voluntary Arrangement (IVA).

Will an Individual Voluntary Arrangement prevent legal action?

One of the main advantages of an IVA is that once it is in place none of the creditors which you have included can start any legal action against you to collect their debt. They must also stop any action they are currently trying to enforce.

As such they are legally prevented from applying to the court for a CCJ against you, an attachment of earnings against your wages or employing bailiffs to come to your door.

BMD Tip: If your creditors are currently in the middle of taking legal action against you this action must be stopped and the Court will cancel whatever application has been made.

What happens if I already have a CCJ or attachment of earnings?

If one or more of your creditors has already been awarded a CCJ or even an attachment of  earnings against you an IVA might be an ideal solution.

This is because once the Arrangement is in place these forms of action will be overturned. Even if money is currently being taken from your wages this will stop.

You will start receiving your full wages and you are simply responsible for making your ongoing IVA payments as agreed.

Do you want help to start an IVA? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts

Will an Individual Voluntary Arrangement stop a Charging Order?

If one of your creditors is currently in the process of applying for a Charging Order against your home then it should be possible to put a stop to this by starting the application process for an IVA.

Depending on the time scales involved an application may have to be made at the court for an Interim Order which will suspend the charging order process for a period of weeks to give time for the Arrangement to be put in place. Once this is done then any applications for a charging order must be stopped.

BMD Tip: an IVA cannot overturn a Charging Order that has already been issued against your property. This is because by definition the debt has then become secured and can no longer be included in the Arrangement. Where you already have a charging order against your home you can still use an IVA but it will only cover your remaining unsecured debts.

Can an IVA prevent Bankruptcy?

It would be unusual for commercial creditors such as banks, credit card companies or payday loans companies to try and make you bankrupt. However if you owe tax to HMRC then you could be threatened with this action.

Once an IVA is approved then any creditor such as HMRC who is trying to make you Bankrupt must stop.

If you have already declared yourself bankrupt or a creditor has forced you into bankruptcy it may still be possible to propose an IVA to your creditors and then overturn this. However you would have to be in a position to offer a better return than would be expected through the bankruptcy process.

Dont wait until it’s too late to start an IVA.

If you are struggling with your debt it is important to take action as soon as possible to prevent further creditor enforcement actions from being taken against you.

An IVA can be very useful for many reasons but for protecting yourself from any or further legal action from your creditors it is very beneficial particularly if you are a home owner as it will prevent your creditors securing their debts against your property.

However if a Charging Order is already issued this cannot be overturned. Therefore if you believe that any of your creditors are currently taking this type of legal action against you it is imperative that you consider starting the application process without delay.