Can an IVA stop a CCJ? 2022 Guide
Can an IVA stop a CCJ? This question may be asked by people who are worried about being issued with a CCJ or by people who already have one. We recap on IVAs and CCJs before answering our main question from both angles in this guide.
What is an Individual Voluntary Arrangement?
An Individual Voluntary Arrangement (IVA) is a debt solution for people struggling to pay back their debts and have usually gotten into arrears. If approved, it legally binds you to make a monthly payment which is divided between creditors based on how much you owe each of them. This arrangement usually lasts for five years and any outstanding unsecured debt after this period is written off.
However, your IVA could be extended by a further 12 months or you may be required to borrow against home equity and pay a lump sum to end the IVA. You can learn more about IVAs by reading this guide.
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What is a County Court Judgment (CCJ)?
A County Court Judgment (CCJ) is a court order from a judge. They are usually requested by companies and lenders that are chasing individuals for arrears. If you are issued with a CCJ, you have a legal responsibility to pay the debt or come up with a method of repaying with the creditor.
Is an IVA better than CCJ?
A CCJ is an escalation of a single unpaid debt, whereas an IVA is a debt solution that puts you on track to repay all your debts with the potential to have some of your debt written off. You should discuss which option is better with a debt adviser. Free debt advice services are available through debt charities.
Can an IVA stop a CCJ?
Getting an IVA approved will stop applicable creditors from applying for a CCJ and chasing you for the debt. Creditors are not allowed to chase you for the debt outside of the IVA agreement once approved, which means they cannot apply for a CCJ against you once the IVA is in place.
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Can you get an IVA with a CCJ?
You can still get an IVA if you have an existing CCJ. In fact, a CCJ debt should be included in your IVA proposal to show that you are treating all creditors equally. If you were to make separate payments on a CCJ outside of the IVA, it would be viewed as giving that creditor preference and could cause your IVA proposal to fail.
When you do move from a CCJ to an IVA, you will make no more CCJ debt repayments. The creditor with the CCJ against you will receive their money via your insolvency practitioner and your single monthly payments.
Can a creditor cancel a CCJ?
Creditors do not cancel CCJs, but a CCJ will be superseded by an IVA agreement. There is a possibility to have your CCJ stopped if you have been issued with a CCJ while your IVA application is in motion.
Can an IVA stop bailiffs?
Getting approved for an IVA could stop you from facing bailiffs and paying bailiff fees. If you are issued with a CCJ and do not pay the debt, the creditor could enforce the debt with bailiffs. The creditor cannot chase or enforce the debt with bailiffs if you have an IVA agreed. In fact, they are not allowed to contact you again.
If you are already dealing with bailiffs, the opportunity to agree to an IVA may have passed, but you might be able to agree on a payment plan with the bailiffs.
Do most creditors accept IVA?
Creditors are more likely to accept an IVA if you are genuinely doing your best to pay the debt and are treating all your creditors equally by including them all in the IVA. At least 75% of all creditors must agree to the IVA proposal for the IVA to be accepted. All creditors are included if 75% of creditors vote in favour of the proposal, even any that voted against it.
Read more about IVAs and CCJs here!
CCJs and IVAs are hot topics here at MoneyNerd, which is why you can find plenty more articles and discussion posts covering them. Thanks for taking the time to read this guide and tune back in soon for more IVA help.
*Note: This is a real life example based on a customers’ savings data in October 2020.