Individual Voluntary
Arrangement.( IVA)What is an IVA?
An IVA in a nutshell, is an
alternative to bankruptcy! It's a contractual arrangement between you and your creditors (the people you owe money to)
where an agreement is reached for you to make reduced payments towards your debts, so you can pay off an agreed percentage
of the total debt. Usually the IVA will last for a 5 year period and the debts are then classed as paid off.
Owing to it's formal nature, an IVA has to be implemented by a licenced insolvency practitioner who is deemed
to be impartial.
You must have an income to enter in to an IVA.
How
does an IVA ( Individual Voluntary Arrangement) work?
If you decide that an IVA is the right thing
to solve your debt problems, the first thing that happens is you will be required to answer a number of questions regarding
your current financial situation and based on the replies that you give, a repayment amount will be agreed with you. You will
be asked to provide as much evidence as you can.
List of Items Required for an IVA
Information questionnaire to include the following :-
Personal Information
Income & Expenditure Budget
Details of Assets (property, vehicles)
List of Creditors( including names, addresses, reference numbers and balances)
Debt History
ID Verification/Photo ID
Proof of Residence ( utility bill)
Evidence
of Wages ( last 3 months wage slips or last 6 weeks if paid weekly)
Latest Accounts if self employed
Evidence of Tax Credits, Benefits, Pension, Maintenance, or any other income.
Latest
Mortgage Statement.
Latest Secured Loan Statement
Copy of Rent or
Tenancy Agreement
Copy of any Vehicle Hire Purchase Agreement.
Last
3 months Bank Statements for all accounts held.
Copies of recent letters or statements for all
creditors
Details of any legal action being taken.
Once all the necessary paperwork has been established and you have agreed with Insolvency Practitioner (IP) exactly
how much you can afford to pay each month, the IP will apply to court for an Interim Order. When this is in place, none of
your creditors will be allowed to take any legal action against you, a creditor meeting will be scheduled and you must attend.
IVA application.
Approval of the IVA
For
an IVA to get approval, your creditors will be asked to vote either for or against the arrangement. Although a time and a
place are scheduled for the meeting, it is unlikely that many of your creditors will attend. The voting tends to be done prior
to the meeting by fax or post.However, if one creditor votes for the IVA, it will be approved. But
if one creditor votes against it and they represent less than 25% of your debt, the meeting will be suspended and other creditors
will be called upon for their vote.
At this point it is worth asking
the question, " Why would a company that you owe money to, accept a reduced payment? Well it's a business
decision and it's going to be the best offer they will get from you.
Client Benefits of an IVA
- Usually only lasts for 60 months
- No further creditor contact
- Affordable level of monthly payments
- Interest is frozen.
- No charges can be added
- Less stigma
than bankruptcy
- Protect assets
- Outstanding debt written off upon
completion
- Fees absorbed by your creditors in most cases
If any creditor that represents more than 25% of your debt votes against you, the IVA will fail.
This is because an IVA will only be approved if 75% of your creditors in monetary terms accept the proposal.
Most IVA's are accepted as they are viewed by the majority of companies as a more
satisfactory conclusion than bankrupting someone and of course in most cases they will receive more money back!
The Individual Voluntary Arrangement once set up, is legally binding, as long as your payments are kept up to date.
When the agreement has finished, you will be free of the debts, irrespective of how much has been paid.
It is the IP's responsibility to review your financial circumstances over the course of the
IVA and if your position has changed, they will make recommendations to change the payment you are making. The IP ensures
that the terms and conditions that were agreed initially are adhered to throughout the life of the IVA.
Your responsibility is to pay the agreed amount promptly to the IP each month and they then distribute
the payments on a pro-rata basis to all your creditors. It is in your interest to pay the agreed amount, because if you don't
the IVA will fail and you will be back to square one, with creditors chasing you for the money you owe them.
If you have completed the IVA, it allows you to make a fresh financial start.
It is worth mentioning that if you have endowment policies or have equity in your
property, you may be expected to cash in the policy or remortgage your property to put towards the IVA.
Individual Voluntary Arrangement application
IVA Process
Complete enquiry form.
An advisor will contact you to make an appointment.
Work through an income and expenditure form.
Provide
all the required evidence.
We will pass on to an appropriate Insolvency Practitioner - Debt Focus
They will draft a proposal.
You agree the proposal.
Interim Court Order.
Meeting of creditors.
IVA accepted.
IVA will then be supervised by Insolvency Practitioner.
Complete the individual voluntary arrangement( IVA) term.
Fresh Financial Start.
