Who can benefit from an IVA?
An IVA is available to all individuals, Sole Traders and Partners who are experiencing creditor pressure and it is used particularly by those who own their own property and wish to avoid the possibility of losing it in the event they were made bankrupt.
How an IVA Works
1) Proposal submitted to court with a view to obtaining an Interim Order.
2) An Interim Order is issued by court stopping creditors from taking any action against you whilst a meeting of your creditors is called and held to decide whether the proposals are acceptable to them or not.
3) The following information will need to be gathered and presented as part of your IVA file:
The Nominee’s comments on the debtor’s proposals
- Notice of the date and location of the meeting of creditors to vote on your proposals
- A Statement of Affairs that lists your assets and liabilities and your income and expenditure
- A background statement that explains the circumstances that culminated in the IVA being required
- A schedule advising creditors of the requisite majority required to approve the IVA
- A complete list of creditors
- A guide to the fees charged by the Supervisor following approval of the IVA
- A form of proxy for voting purposes
The creditors meeting is usually held 2-4 weeks after the above has been circulated to creditors.
The purpose of the meeting of creditors is to agree or reject your IVA proposals with or without modifications which can be requested by creditors at the meeting.
Acceptance of the proposals requires 75% in value of those creditors who vote. The 75% relates only to those who actually vote, all will be bound by the terms of the arrangement whether they voted or not.
Upon approval of the IVA, a Supervisor is appointed (usually the Nominee) to ensure the proposals are adhered to and to distribute the dividends to creditors.
Assuming the debtor complies with the terms of the arrangement, upon completion of the IVA he will be fully discharged from all liabilities included within it.
IVA Detailed Analysis
An IVA Detailed Analysis is a financial overview of your situation to establish whether an IVA is suitable.
Learn more about IVA Detailed Analysis
IVA Paperwork round up
Collect together the documents needs to support your IVA
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A ruling from the Court protecting you from your Creditors for a period of 7 weeks
Lern more about Interim Order
IVA Proposal document
Your IP produces a formal written proposal for your creditors.
Learn more about IVA Proposal document
IVA IP Review
Your IP will review your case once a year or upon your request. This is to ensure that your IVA is running ok.
Learn more about IVA IP Review
IVA Creditor Meeting
If 75% of the value of the creditors who vote by the date of the Creditor Meeting say yes, then your IVA is accepted. Once the IVA is accepted, then all of the creditors listed in the IVA proposal (even the ones who didn’t bother to vote) are bound by law to bide by the terms of the IVA (they cannot bother you again).
Learn more about IVA Creditor Meeting
IVA Court Registration
Your IVA is registered at the local County Court
Learn more about IVA Court Registration
IVA Management & Review
Your IP is responsible for the ongoing management of your IVA
Learn more about IVA Management & Review
Individual Voluntary Arrangement (IVA)
If you cant afford to repay the Debt that you owe, an Individual Voluntary Arrangement (IVA) can be used to repay as much of the debt as possible in a more sensible way. It will normally involve Creditors stopping all further interest and charges and writing off a percentage of the debt. They are prepared to consider this because the alternative may be a bankruptcy where they would receive far less. Generally an IVA will involve a monthly payment plan which lasts for no longer than 5 years. However, this period could be reduced if a lump sum is available perhaps from the release of equity from property.
Therefore the IVA gives light at the end of the tunnel to those who are struggling with serious debts.
Learn more about Individual Voluntary Arrangement (IVA)
The debtor is the person who owes money. If you have debt in your name, then you are liable for this debt and you are the Debtor. You are only liable for debt in your name. This means if your partner or spouse has debts in their name, then even if you have helped them spend the money, you are not liable for this debt and you are not the debtor.
Learn more about Debtor
These are the people you owe money to. There are two types of creditors:
- Secured Creditors – These creditors can take something of yours if you do not maintain the debt repayments. A house mortgage or a car HP agreement would examples of secured creditor. Secured creditors CAN NOT be included in an IVA.
- Unsecured Creditors – These creditors can not take anything of yours if you do not pay them. Examples of unsecured creditors are credit cards, bank loans, catalogues and store cards, student debts and family debts. Unsecured creditors CAN be included in an IVA.
Learn more about Creditors
The IVA advisor is the person who will work with you to understand your financial circumstances. They will explain your options and work with you to resolve your debt problem. They will be a single point of contact for you.
Learn more about IVA Advisor
If you want to do an IVA, you cannot do this yourself. You have to use an Insolvency Practitioner (IP). The IP is like a Chartered Accountant They have a special license granted by the Government which gives them the legal authority to propose an IVA and negotiate it with you creditors. They have a legal duty to ensure that the IVA is the fairest deal possible for both you and your creditors.
Learn more about Insolvency Practitioner
If you do not repay your debts on time, a Debt Collector may be employed by your Creditor to chase you for the money you owe. The job of the debt collector is to try and pressure you into paying your debt. They do this by making threats such as visiting you at home, and taking Court action
Learn more about Debt Collector
Judge / Court
The Judge and Court uphold the law and are there to help you. If you need temporary protection from your creditors to stop them taking further action against you, you can apply to the Court for an Interim Order. This will stop debt collectors from hassling you while your IVA case is presented. Once your IVA is accepted, the Court will ensure that the Creditors respect the agreement and will stop them from bothering you any more about your debts.
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An Interim Order is a legal Court ruling which gives a breathing space from creditor actions. Once the Interim Order is in place, any Creditor actions to recover debt currently underway must be stopped and no further actions can be started for a period of 7 weeks. The idea is to stop any one creditor taking an action which could result in all the creditors loosing out overall (for example a Bankruptcy or a Charging Order petition). An Insolvency Practitioner can use the time given by an Interim Order to propose an IVA to the Creditors.
Learn more about Interim Order
If a Creditor is struggling to recover the money they are owed and they know that the Debtor has a property, the Creditor can apply to the Court for a Legal Charge against the property.
Learn more about Legal Charge
Disposable income is the difference between your normal household income and your reasonable household living expenses.
Learn more about Disposable Income
Statement of Affairs
Your Statement of Affairs is a document which records all of your financial details and history.
Learn more about Statement of Affairs
IVA Proposal Document
The IVA Proposal Document is a summary of the main details of a Debtor’s Statement of Affairs.
Learn more about IVA Proposal Document
Assets are things that you own which have a reasonable resale value.
Learn more about Assets
Equity is the money which would be left after a property is sold and all outstanding mortgages and arrears owed to the bank are paid off. In effect it is the asset value that the owner personally has in the property.
Learn more ablout Equity
Meeting If an IVA is proposed, the creditors are given two weeks to consider the proposal. At the end of these two weeks, there is a dead line called a Creditors Meeting. This meeting is an opportunity for the creditors to get together, discuss and agree the IVA. In reality, creditors rarely bother to attend this meeting. They prefer instead to write a letter to the Insolvency Practitioner to give their acceptance or rejection of the IVA proposal. Generally it is not necessary for the Debtor to attend the Creditor Meeting.
IVA Annual Review
If Creditors accept an IVA, they are all legally bound by its terms.
Learn more about IVA Annual Review
For more information see: