6ee981e2

How to improve your credit score after an IVA

Fri, 22 Mar 2024 09:57:10 GMT

If you’re struggling with significant levels of debt, an Individual Voluntary Arrangement (IVA) is one option to regain control of your finances. However, the lasting impact of an IVA on your future financial health, and in particular your credit score, do need to be seriously considered before entering into the IVA process.

In this guide, we explore to what extent an IVA can impact your credit rating. We also provide our top tips for rebuilding and improving your credit score after completing your IVA.

Do IVAs affect credit rating?

Yes. Entering into an IVA will certainly affect your credit rating. Unfortunately, there is no way around this.

An IVA is a form of insolvency. For this reason, by entering into an IVA, you’re signalling to credit reference agencies and creditors that you, as an individual, are insolvent. As a result, credit reference agencies such as Equifax, Experian and TransUnion will record that you have been in an IVA and this mark will stay on your credit report for six years from the day your IVA is approved.

The major lasting consequence of this is that you will likely struggle to secure credit in the immediate future. This is because your IVA mark on your credit file signals to potential lenders that you are (or have been) struggling to repay past or current debts, making you a high-risk borrower.

Naturally, this means that in the years during and immediately following your IVA, you are likely to either be rejected for credit such as personal loans, mortgages and credit cards, or face very high interest rates with any credit you are approved for.

However, it’s important to remember not to rule out an IVA simply because you’re worried about damaging your credit score. Indeed, if you’re in a position in which an IVA is a serious option, the chances are you’re probably already struggling to service your existing debts. If this is the case, your credit score is likely already being damaged.

How to rebuild your credit rating after an IVA

Are gambling debts enforceable?

Thu, 21 Mar 2024 14:56:38 GMT

For many, gambling is a harmless hobby, but for others, the allure of this pastime can lead individuals down a path of financial hardship, resulting in accumulated debts.

According to a 2022 study by Citizens Advice, 18% of people who regularly gambled online were in significant gambling debt. That equated to 3.3 million people.

This statistic has raised an interesting legal question in recent years – when significant debts arise from gambling, are these debts always enforceable under UK law? And connected to this, if they are, what are the potential legal ramifications you can face if you find yourself unable to pay your gambling debts?

In this guide, we explore the legal aspects surrounding gambling debts in the UK. This will include the issue of enforceability, as well as outlining to what extent a partner or spouse is legally liable for their other half’s gambling debts. Finally, we also provide our top tips for getting out of gambling debt.

Are gambling debts enforceable by law?

This is a bit of a grey area. In the UK, gambling debts are legally enforceable as long as the debts in question relate to ‘lawful gambling’. If your betting was done through a regulated bookmaker or casino – that’s an organisation that follows the regulations outlined in the Gambling Act 2005 or the National Lottery Act 1993 – your debts can be collected legally. You can find out more on the Gambling Commission website.

That being said, there are legal protections in place when it comes to unregulated gambling.

If the person/organisation you’re laying a bet with is supplying you with credit, then any debts are not enforceable. This is because it’s against UK law for bookmakers to supply you with credit. According to the Consumer Credit Act 1974, this form of lending is illegal.

Similarly, regulated bookmakers in the UK should not allow you to deposit money into an online account from a credit card. Only debit cards or prepaid cards can typically be used. In theory at least, if your debt comes as a result of online gambling based on credit provided by the bookmaker OR money deposited from a credit card, the debt may not be enforceable.

However, if you decide to take out a loan or access another line of credit (not from the bookmaker) to pay for your gambling, the debt can be treated the same as any other and is therefore enforceable.

Can you be liable for a partner’s gambling debt?

Put simply, no. You’re only responsible for debt that’s in your own name. That is to say, if debt is in your partner/spouse’s name – be that gambling debt or any other form of debt – you’re not responsible for paying the money back.

Of course, this doesn’t mean a partner’s gambling debts cannot impact you at all. Your own financial situation could well be negatively impacted as a knock on effect of your partner’s gambling if they are moving money around in order to service gambling debts. This can be particularly problematic if you have any joint finances, such as a mortgage or joint bank account.

While you’re not liable for your partner’s gambling debts per se, if your partner is using money from the joint account to gamble, or is unable to pay their part of the mortgage payment as a result of their gambling debt, you can become indirectly impacted by your partner’s gambling habit. Additionally, if one partner acts as a guarantor for the other’s debts, they may become directly liable for any outstanding obligations.

How to get out of gambling debt

The process of getting out of significant amounts of gambling debt can be a daunting task. However, if you follow the right steps, getting out of this form of debt is possible.

Before doing anything else, you will need to stop gambling. After all, if you are unable to stop gambling, you’re not going to be able to get yourself debt-free. If you believe you’ll struggle to stop gambling without help, be sure to seek professional support. For example, you can contact the National Gambling Helpline at 0808 8020 133 or visit them at National Gambling Helpline .

Once you’ve stopped gambling, we recommend starting your financial recovery by simply assessing the full extent of your gambling debt. This can be done by compiling a full list of all of your debts. If you have significant debts from other aspects of your life as well as gambling, these should be included too.

Once you have done this, it’s time to put together a realistic budget for your life. This budget should prioritise essential life expenses such as food costs, rent and mortgage payments, council tax, utility bills and child maintenance costs. If, after you’ve put this budget together, you’re still unable to both service your debts and pay for your essentials, you may need to explore professional debt management options. These include discussing the possibility of debt consolidation or putting an informal debt management plan in place with your creditors.

If gambling debts are more significant, you may need to seek professional advice. When taking this advice, it may be suggested that a tailored Debt Management Plan (DMP) or an Individual Voluntary Arrangement (IVA) represent the most suitable methods of helping you get out of gambling debt.

What happens at the end of an IVA?

Thu, 21 Mar 2024 14:56:38 GMT

Individual Voluntary Arrangements (IVAs) typically take between five and six years to complete. When you first enter into your IVA, the end of the tunnel can feel a lifetime away.

However, the truth is, if you stick to your IVA terms and conditions, time can fly by. That’s why it can be helpful to know exactly what to expect when you come to the end of your IVA, so you can prepare for the process to be formally completed.

In this guide, we explore exactly what happens when an IVA is completed. This will include explaining what an IVA Certificate of Completion is and looking at whether or not IVAs can be paid off early.

What happens when an IVA is completed?

The formal IVA completion process can be broken down into four key stages. These are:

1. Make your final payment

The IVA completion process starts from the moment you make your final payment. However, your IVA is not officially finished until you receive your Certificate of Completion. You may think you’ve made your final payment only to find you have remaining repayments due to payment breaks or additional months added to your initial IVA Proposal. Your IVA cannot be considered complete until your IP has provided final confirmation.

2. Receive IVA Certificate of Completion

The official end of an IVA is signalled by the Certificate of Completion. This will be sent to you by your IP after you have made your final payment and they are satisfied all terms of your IVA Proposal have been adhered to.

What is an IVA Certificate of Completion?

IVA Certificates of Completion act as official evidence that you have complied with all terms outlined in your initial IVA Proposal. They also confirm that you have made your final payment. Once received, you should submit a copy to the major credit reference agencies in the UK. These are Equifax, Experian, and TransUnion. This allows credit reference agencies to update their records, thus starting the process of rehabilitating your credit score.

How long does it take to get an IVA Completion Certificate?

Your IVA Proposal should state how long it will take for your IVA Completion Certificate to arrive. Usually there is a three to six month period of ‘housekeeping’ to allow for all final payments to creditors, final income reviews and administration to be dealt with.

3. Check the Insolvency Register

Three months after you have received your IVA Completion Certificate and informed the credit reference agencies, check the Insolvency Register to make sure your name no longer appears in the register. This can be done on the Insolvency Service website. If your IVA still appears on the Insolvency Register, get in touch with the Insolvency Service to request an update.

4. Start to rebuild

Once the three stages above are complete, the only thing left to do is start to rebuild your financial record. While curating a healthy credit score may take some time – years rather than months – it’s not impossible.

Your IVA itself will stay on your credit file for six years from the moment it is approved. However, by making good financial decisions, using credit sensibly, and following our top tips for improving your credit score, you can progress towards healthy financial independence more quickly.

Can I pay an IVA off early?

Yes, concluding your IVA early may be an option. In order to do this, you need to work with your IP. A ‘Variation meeting’ will be called, and, like the original proposal, 75% of your creditors have to agree to an early settlement before it can proceed.

The most common reason for early settlement is if you come into a sum of money, such as an inheritance or bonus. However, the terms of early settlement can vary greatly from one IVA to another based on specific circumstances and the demands of your creditors.

For this reason, before making the decision to pay your IVA off midway through its term, it’s important to discuss all options with your IP to fully understand the implications. After all, in some circumstances, it might not actually be financially advantageous to settle early. For example, if the costs of settling early – including early redemption fees or lost potential interest on investments – outweigh the benefits of being debt-free sooner, and/or if your IVA terms include penalties for early settlement, it might not be beneficial.

What is an IVA full and final settlement process

An IVA full and final settlement is simply the name given to the process of proposing a one-time repayment to your creditors to settle your debts, typically for a reduced amount. It is a process you and your IP would have to discuss and approve in order to settle your IVA early.

As discussed above, any proposal to end your IVA early must come through your IP. They will negotiate with your creditors on your behalf, through a Variation proposal, if they believe they can achieve a deal that is beneficial to all parties involved.

Of course, in order for the deal to proceed, 75% of your creditors must be in favour of agreeing to your proposed lump sum final settlement payment. As this is likely to be lower than the total outstanding amount, there is no guarantee the Variation proposal will be accepted.

If your creditors do accept your Variation proposal, they will typically agree to write off your remaining debt and your IVA will finish early. However, there are certain limitations and a small number of debts may survive insolvency. Of course, your IP will make you aware of any such circumstances before the IVA is proposed.

It’s important to note that a record of your IVA will also still appear on your credit report for six years from the moment it was initially approved. An early settlement will not change this. What an early settlement can do, however, is remove some of the constraints of a long-term IVA. This includes the removal of the public record of your agreement on the Insolvency Register and the financial freedom that comes with no more monthly repayments.

Spring Budget 2024: What it means for your finances

Thu, 21 Mar 2024 14:56:38 GMT

Chancellor Jeremy Hunt has confirmed a 2p reduction in National Insurance during his Budget speech to members of Parliament. This announcement comes as part of the final budget before the anticipated general election later this year.

The budget introduces a series of steps designed to assist families facing financial challenges, such as freezing fuel duty tax and continuing the Household Support Fund for an additional year.

Key statements made so far

1. £90 fee scrapped for Debt Relief Orders (DROs)

DROs are issued by the Insolvency Service to help people with low incomes who owe less than £30,000. These orders pause your debt payments and the accumulation of interest for one year. If your financial status remains the same after this period, your debts are cancelled. Previously, there was a £90 fee for this order, but this charge will no longer apply.

2. Changes to Child Benefits

Families will now receive the full amount of child benefits if the parent who earns the most in the household makes up to £60,000 a year. Currently, this is only for households where the highest earner makes up to £50,000.

If the highest-earning parent in a household earns up to £80,000, they will still receive some child benefits, but not the full amount.

3. Expansion of Childcare Support

In 2023, the government announced a significant expansion of childcare support in England by providing 30 hours a week of free childcare for 38 weeks a year, for eligible working parents of children aged nine months to three years which will remove barriers to work for over 400,000 parents.

The first stage of this offer is being rolled out in April 2024, when eligible working parents of two-year-olds will be entitled to 15 hours of childcare a week.

4. National Insurance cut

A 2p cut in National Insurance tax has been announced which means earners will now pay 8% of their taxable salary in National Insurance contributions, down from 12% last year.

The government will also support the self-employed by cutting the main rate of Class 4 self-employed NICs to 6%. This will benefit over 2 million individuals, recognising the contribution of the self-employed and ensuring work pays for all. Taking this together with changes from Autumn Statement 2023, this will mean a 3p reduction in the main rate of Class 4 and the abolition of the requirement to pay Class 2 from April 2024.

5. Household Support Fund extension

Local councils will continue to receive money to help families cover costs for basic needs like electricity and water bills, housing costs, groceries, and other necessities. The fund was due to end on 31st March 2024, but has now been extended by six months, with an additional allocation of £500 million.

6. Repayment period for Universal Credit ‘Budgeting Advance’ loan increased

The repayment period for the Universal Credit ‘Budgeting Advance’ loan will now be increased to 24 months instead of the previous 12 months.

The amount you owe is gradually taken out of your regular Universal Credit payments, resulting in a slight decrease in each month until the loan is fully settled.

7. Fuel and alcohol duties frozen

Fuel duty is a tax which is used to fund various public expenditures, including the maintenance and construction of roads and infrastructure.

The Chancellor has announced this will not be increasing in April in line with inflation and the 5p litre cut implemented in March 2022 will stay for another 12 months.

Alcohol duty will be frozen until February 2025 which is said to benefit 38,000 pubs across the UK.

8. Tax Simplification

The government is delivering further administrative reforms to make it easier for individuals and sole traders to meet their tax obligations by easing the payment of inheritance tax before probate or confirmation. From 1 April 2024, personal representatives of estates will no longer need to have sought commercial loans to pay inheritance tax before applying to obtain a “grant on credit” from HMRC.

They’re also removing confusion for Income Tax Self-Assessment customers by simplifying access to digital services for customers who want to pay in instalments in advance via a Budget Payment Plan, or in arrears via a Time to Pay Arrangement from September 2025.

9. Changes to underlying tax rules

Under the new regime, anyone who has been tax resident in the UK for more than four years will pay UK tax on foreign income and gains, as is the case for other UK tax residents. This is a much simpler and clearer test, with less scope for ambiguity than the current system. The new regime will no longer rely on the remittance basis, removing a source of complexity that incentivises individuals to keep income and gains offshore in the current system.

The Furnished Holiday Lettings (FHL) tax regime will be abolished from 6 April 2025, meaning short-term and long-term lets will be treated the same for tax purposes. Individuals with FHL and non-FHL properties will no longer need to calculate and report income separately

10. Supporting people into work

Reforms to the Work Capability Assessment announced at Autumn Statement 2023 will reduce by 66% the net flow of people forecast over five years to be assessed to have no work requirements because of their health condition, ensuring that more individuals receive the right work and health support at the right time.

The government is extending the duration of the Additional Jobcentre Support pilot across England and Scotland for a further 12 months. This pilot will continue to test how intensive support at specific points in a Universal Credit claimant’s journey can help support them into employment or higher earnings.

As part of the pilot extension, claimants will also be required to accept a new claimant commitment at 6, 13 and 26 weeks, agreeing to more work requirements or have their claim closed.

The government is also providing additional funding to support the processing of disability benefit claims. The funding will increase system capacity to meet increased demand, enabling people to get the right support in a timely manner.

11. Vaping and Tobacco Duty

The government will introduce a new duty on vaping products from 1 October 2026, with registrations for the duty opening from 1 April 2026. The rates will be £1.00 per 10ml for nicotine free liquids, £2.00 per 10ml on liquids that contain 0.1-10.9 mg nicotine per ml, and £3.00 per 10ml on liquids that contain 11mg or more per ml.

A 12-week consultation will be published on the policy design and technical details alongside the Spring Budget. The government will also introduce a one-off tobacco duty increase of £2.00 per 100 cigarettes or 50 grams of tobacco from 1 October 2026.

I started using Recruit for my recruitment needs about three years ago. In that time, we've recruited dozens of tech professionals, more quickly than ever. The staff at Recruit is friendly, efficient and professional.

6ee981e2

How to improve your credit score after an IVA

Do IVAs affect credit rating?

How to rebuild your credit rating after an IVA

Are gambling debts enforceable?

Are gambling debts enforceable by law?

Can you be liable for a partner’s gambling debt?

How to get out of gambling debt

What happens at the end of an IVA?

What happens when an IVA is completed?

1. Make your final payment

2. Receive IVA Certificate of Completion

What is an IVA Certificate of Completion?

How long does it take to get an IVA Completion Certificate?

3. Check the Insolvency Register

4. Start to rebuild

Can I pay an IVA off early?

What is an IVA full and final settlement process

Spring Budget 2024: What it means for your finances

Key statements made so far

I started using Recruit for my recruitment needs about three years ago. In that time, we've recruited dozens of tech professionals, more quickly than ever. The staff at Recruit is friendly, efficient and professional.

Chris Avond

CEO Affordable Ltd.