An Individual Voluntary Arrangement (IVA) is a legally binding agreement with your creditors to settle debt. A single affordable amount is paid each month for five years after which any outstanding balances are written off.

From the date that your Arrangement is agreed you are legally protected. By law interest and late payment charges must be stopped and your creditors must cease all collection activities against you. This means no more letters and no more phone calls.

Unfortunately you may still find that you are being hassled by your creditors particularly in the first six months of the arrangement. We consider what action you can take if this happens to you.

You are now protected by your IVA

If you are in an IVA and continuing to receive threatening collection letters and phone calls from your creditors the first thing to remember is not to panic.

Once the Arrangement is in place and legally binding and your creditors cannot take further action against you. However, it can take some time for letters confirming the acceptance of your Arrangement to be sent through to all of your creditors and even longer for them to update their computer systems accordingly.

It is also important to remember that insolvency practitioners (IPs) deal directly with the original creditor or current owner of the debt if it has been sold on.

As such, if a debt collection agent has been involved with trying to recover the money owed, it may take a while for their services to be terminated by the creditor and in the mean time they will continue to contact you.

BMD Tip: If you receive a phone call from a creditor or collector you should tell them that you are now in an IVA and the date it was accepted. You could also offer to send them a copy of the Chairman’s Report – official confirmation that the IVA is in place – which should have been forwarded to you by your insolvency practitioner.

Let your IP do the work

If the collector on the phone does not seem to want to listen, don’t get flustered. Simply tell them that legally, you are not allowed to make any further payments to them and end the call.

You should then contact your insolvency practitioner (IP) straight away and ask them to speak to the creditor on your behalf. This is part of their job and they should be happy to help you.

In the same way, if you receive a collection letter, simply contact your IP and let them know. They should be able to confirm that the creditor has already been contacted or agree to speak to them again if necessary.

If you want to be proactive yourself, it will not hurt to respond to the letter by sending back a copy of the chairman’s report confirming that your IVA has been accepted.

BMD Tip: If your are currently considering an IVA it is important to remember that the vast majority of people who carry out these arrangements find that contact from their creditors will stop very quickly – normally within a few weeks. However if you are finding that this is not the case you should definitely call your IP and ask them for help. After all, that is what they are there for.