Who will find out about my IVA?

Insolvent persons who are considering entering into an Individual Voluntary Arrangement (IVA) with their creditors are often concerned as to whether the world generally and certain other people in particular will find out about them and learn that they are in financial trouble. This is a very understandable worry. When your financial reputation is on the line, it would be nice to think that you can keep your neighbours, your friends, your family, your work colleagues and your employer from learning about your difficulties while you try to remedy the situation. The plain unvarnished truth is that there is no guarantee that you can keep your IVA quiet. However there are steps you can take to improve your chances that certain people will be kept in the dark and even put off the scent, so to speak, particularly when they have no financial interest in your status and when all they have to gain from discovering your financial problems is nothing more than satisfying their curiosity.

So who needs to know, who is entitled to know and who must be informed about your IVA? There are various parties to your IVA who have a genuine financial interest in being informed about it. This is because your actions may affect them in a significant way. The obvious parties are your personal creditors such as banks with whom you have overdrafts or loans, credit card providers, other loan providers such as credit unions, mortgage providers and finance companies who have provided HP facilities to you. If you have arrears on your accounts with utility providers such as suppliers of water services, gas or electricity or if you are behind with your council tax payments, those creditors will have to be informed as well. The same applies if you are in receipt of benefits and may perhaps have been overpaid. If you have sky television, a telephone or a mobile, you must also inform the suppliers of those services if your accounts are in arrears.

Worried about IVA
Apart from personal creditors, it is only natural that you might feel embarrassed or ashamed if people you know personally become aware of your predicament.

Apart from personal creditors, it is only natural that you might feel embarrassed or ashamed if people you know personally become aware of your predicament. While there is no sure way to prevent such people learning that you have entered an IVA, you can in practice take some steps to minimize the risk of that happening. You can start by acting discreetly yourself. If you engage the services of an Insolvency Practitioner (IP) to assist in drafting your proposal for an IVA, the IP and the members of staff of the insolvency services firm you are dealing with will also exercise discretion, ensuring that your files and business are dealt with professionally and on a confidential basis. To comply with insolvency law however, your IP has to communicate with all of your creditors regularly, at least once a year, when a progress report is circulated to them regarding the conduct of your IVA. You will have authorized them to do this already. Generally your family, friends, neighbours, acquaintances and employer should not become aware of your IVA unless you owe them money. If you do owe any of them money, they have a legal right to be informed of your IVA like any other creditor and they may not be excluded. If you have a business partner they may also have the right to be informed, depending on the nature of the business relationship.

There is one other way in which information regarding your IVA may become public. Once your IVA has been accepted by your creditors, it must be listed on The Insolvency Service website, which is generally of interest only to those involved in the insolvency business or in credit industries. However, that website may be legally accessed by any member of the public and there is really no way to stop this happening unless the law is changed. The good news is there is no provision in legislation requiring the mandatory publication of your name in newspapers or periodicals publicizing the fact that you have entered into an IVA.

If you are self-employed then your trade creditors will have to be notified about your IVA as will HM Revenue & Customs (HMRC). Since payments of tax and national insurance contributions are usually made in arrears, then HMRC are already a creditor of yours. Even if you are not self- employed but have been overpaid tax credits, again HMRC will have to be notified about your IVA since you are obliged to repay any such overpayment.

Another category of persons who have to be notified about your IVA is anybody who owns any asset jointly with you and particularly property. This would usually include your spouse or co-habiting partner since your IVA may have an effect on the future ownership of joint assets. There are certain exceptional circumstances where a spouse or co-habiting partner might not need to be notified of your IVA but this would be most unusual. Your IP can advise you regarding such exceptions when they have examined your personal circumstances.

Furthermore, the court where your IVA is registered and The Insolvency Service also have to be notified. Once your creditors learn of your IVA, they are likely to record defaults on your credit files which are maintained by the credit reference agencies such as Experian and Equifax. Unfortunately, access to and publication of such personal financial data relating to insolvent individuals is not prohibited by the Data Protection Act.

There are a lot of people who are not notified about your IVA. Your employer for a start is not notified about your IVA whereas if you were to be made bankrupt your employer would be told about it. The general public which includes your neighbours, your acquaintances, your relations, your friends and your family and subject to the exceptions stated above, will not be proactively informed about your IVA either. Having said that, anybody may become aware of your IVA by accident or by searching the Insolvency Service website but the fact that you are in an IVA is usually not common knowledge. Certainly the Insolvency Practitioner (IP) who deals with your case as either Nominee or Supervisor of your IVA is duty bound to treat your case in strict confidentiality and any staff employed by the IP in the matter are also so bound. Your IVA may not be divulged to third parties without your express permission. For these reasons the stigma of bankruptcy is markedly absent in an IVA and this is a significant factor as to why insolvent persons often prefer to enter into an IVA than to go bankrupt.

Written by Paddy Byrne
03 / 09 / 2012