Making Sense Of Money

IVA

 

An Individual Voluntary Arrangement, or IVA as we commonly know it, is a formal agreement made between a debtor and his creditors about how debts will be paid (either in full or in part). You need to apply to a court and an insolvency practitioner has to be appointed to supervise the arrangement.

IVAAn IVA is an alternative to bankruptcy. The terms of the proposal to creditors may be very flexible, but creditors would usually expect that they would receive at least as much from the debtor as they would if the debtor was made bankrupt.

An insolvency practitioner (IP) must be involved in an IVA, so you need to find an IP who is willing to act as the nominee of the arrangement. The role of the IP changes during the progress of the case. At first, before you have committed yourself to an IVA, the IP is a professional adviser. He should help you to make your decision about what to do. If you decide to go ahead with the IVA he should help you to put down your proposals to your creditors.

You would either:

• apply to court for an interim order, which stops your creditors taking action against you before your proposal is accepted by your creditors,

or

• go ahead with your proposal without applying for an interim order.

If you apply for an interim order and your creditors do not accept your proposal, you should be aware that you are not able to apply for another interim order for at least 12 months.

    

Once you have decided to go ahead with an IVA the IP becomes your nominee. The nominee has to tell the court about the proposal and, if he thinks the proposals are not fit to put before a creditors’ meeting, he must tell the court. The court may then end the IVA at that stage. If it appears to the IP and to the court that the proposals are acceptable, a creditors’ meeting will be held to give the creditors a chance to vote on whether or not to accept the proposals. If 75% in value of creditors who are represented at the meeting (in person or by proxy) vote in favour of the proposals, the IVA will be implemented. Creditors may ask for changes to the proposal, but the debtor must agree to any changes. Once the proposal is approved it is then binding on all creditors, even unknown creditors (those who had not received notice of the creditors’ meeting). However, once he becomes aware of it, an unknown creditor is able to apply to the court to challenge an approved IVA and the court has the power to revoke the IVA.

If the creditors approve the IVA the IP’s role changes again and he becomes the supervisor and his responsibilities are mainly governed by the terms of the arrangement. He has to act even-handedly between the debtor and the creditors and to ensure that the terms of the proposal are fulfilled.

Whilst an IVA is in force, creditors who are bound by the IVA cannot take any debt recovery action against the debtor. They must look solely to the IVA for repayment of the debts, either in full or in part.

Anyone can consider an IVA to solve their debt problem. IVAs have been put in place for anyone, from your blue collar professional to Armed Forces personnel or members of the Police. Your ability to undertake an IVA is not defined by your job or profession.

Normally, to be eligible, your personal debts must be above £15,000 and you should have 3 or more different creditors. You must also be able to offer a reasonable monthly payment to your creditors. This will vary depending on the debt. However, as a guide, you will usually need to be able to afford at least £200/mth.

Normally any unsecured debts can be included within an IVA.

When an IVA is completed, or if it fails, the supervisor must send a notice to the debtor and to all creditors who were bound by the arrangement, saying that the arrangement has either been completed or has failed. This notice must be sent within 28 days of the completion or failure. The supervisor must also send a report that summarises all receipts and payments made by him during the IVA. He must also explain any differences between what the debtor proposed and what actually happened.

These reports must also be sent to the Secretary of State, within 28 days of completion or failure. This will ensure that the details are removed from the Individual Insolvency Register.

Anyone can consider an IVA to solve their debt problem. IVAs have been put in place for anyone, from your blue collar professional to Armed Forces personnel or members of the Police. Your ability to undertake an IVA is not defined by your job or profession.

Normally, to be eligible, your personal debts must be above £15,000 and you should have 3 or more different creditors. You must also be able to offer a reasonable monthly payment to your creditors. This will vary depending on the debt. However, as a guide, you will usually need to be able to afford at least £200/month.

Normally any unsecured debts can be included within an IVA. Some debts cannot be included within an IVA. These will normally involve secured debts, such as a vehicle HP or Mortgage arrears.

You cannot propose an IVA to your creditors by yourself. By law, you will need the help of an Insolvency Practitioner or IP. There are a number of reputable Insolvency Practitioners, use the search box below or check out the ads. There are also many many reputable Debt Management Companies in the UK that specialise in IVAs and will help you every step of the way – many also offer a free home consultation.

Different Insolvency Practitioners and Debt Management Companies have different ways of charging fees so make sure you ask how this will be done and shop around first. No IP will work for free but this does not mean that you will be facing a hefty  up-front bill if you do decide to go for an IVA as most Insolvency Practitioners will take their fees from the money that you agree you can afford to pay each month. You will therefore not have to pay more than your agreed monthly payment.

Other solutions are available so talk to a professional before deciding on the right option for you and your situation.

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