It’s only natural to be concerned and worried about who will know our business if we go into an IVA. Most of us don’t mind broadcasting good news about our family, our personal circumstances or our achievements. Some very private or self effacing people may like to keep even good news quiet and indeed if one were to win the lottery, there is an argument for not divulging this to the world at large and to the begging letter community in particular!
Bad news is a different story. While entering an IVA is for most people a very positive development insofar as it offers a solution in sometimes intractable financial circumstances, it is still not something that people want to shout about from the roof tops. People want to keep their personal affairs quiet and out of the public domain and generally don’t want others to learn of their financial predicament and they don’t want to be thought of as failures in the context of their personal finances by their nosy neighbours, their friends, their work colleagues, their employer, their relatives or sometimes even by their immediate family members. It’s a question of shame and pride.
So can we keep people from finding out? The plain unvarnished truth is that it’s hard to keep your IVA completely quiet. Still, there are steps that you can take to improve your chances of keeping certain people in the dark and to put them off the scent, so to speak, particularly when they have no financial interest in your status and all they have to gain from learning about your IVA is nothing more than satisfying their own curiosity.
The first question is to ask:
” Who needs to know, who is entitled to know and who must be informed? “
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 which have provided hire purchase 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 any those services where your accounts are in arrears.
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. You must by law engage the services of an Insolvency Practitioner (IP) to assist in drafting your IVA proposal and that IP and their staff members must exercise discretion, ensuring that your files and business affairs 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 members, relatives, 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 your 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 by law be listed on The Insolvency Service website. This website 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 whereas there is such a requirement in cases of bankruptcy.
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, for example property. This would usually include your spouse or co-habiting partner since your IVA may have an effect on the future ownership of your 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 are not informed about your IVA unless you owe them money or jointly own an asset. The IP and the staff they employ are duty bound to treat your case in strict confidence and your IVA may not be divulged to third parties without your express permission.
Of course anybody can search the Insolvency Service website and learn about your IVA that way or they can discover it accidentally. The likelihood of keeping your IVA quiet is perhaps the main reason why IVAs have never acquired the stigma that bankruptcy has historically had, to the extent that nowadays, IVAs have overtaken bankruptcy as a means of sorting out one’s financial problems.
Written by Paddy Byrne
27/11/2013