An IVA, which stands for individual voluntary arrangement, is a relatively straight forward process which has been put in place by the Government to provide a formal solution to help people with serious debt problems who are unlikely to be able to repay them.
The first step in the process is to decide whether an IVA is the right debt solution for you. An IVA is a legally binding agreement between you and your creditors which usually lasts for five years and enables you to agree a payment you can afford and write off the debt you can’t afford. It’s a serious decision to take and you need to make sure you have all the facts first.
Speak with a professional debt advisor
This is probably the most important part of the process. An expert debt advisor will be able to assess your financial situation in detail with you and advise on whether an IVA is the best route for you to solve your debt problems. There are certainly advantages of entering into an IVA but as with most debt solutions there are also disadvantages. You need to be fully aware of all of these so you can make the best decision for you.
The start of the process
The debt advisor will examine your financial situation and detail how much you can afford to pay to the organisations you owe money to and must then decide if the IVA is likely to be accepted by your creditors. If it is assessed that an IVA is the best solution for you to pursue then the debt advisor will prepare a statement of your affairs for the licensed insolvency practitioner, who is required by law to administer and oversee the process. The insolvency practitioner must also give you IVA advice to further ensure this is the right solution for you.
Proposal to creditors
The insolvency practitioner will take note all your debts, who you owe and the circumstances in order to prepare a formal proposal to your creditors which basically sets out what you are offering to pay and what you are requesting to be written off.
Creditors meeting and acceptance
The proposal is sent to all of your creditors who must then decide if they will accept it or whether they will request a modification which then has to be further considered by you. A meeting of the creditors is then called which enables the creditors to discuss the proposal. It is often the case that creditors do not attend this meeting but send their acceptance in writing. As long as the creditors who have responded who hold at least seventy five percent of the total of the debt owed have agreed to the proposal, then it can be registered and then it becomes legally binding on all.
The insolvency practitioner will formally notify the court and all the creditors of the agreement and the details are registered on the IVA Register. The insolvency practitioner would then normally be appointed as the IVA Supervisor and is responsible for administering the legal procedures and fulfilling the requirements to your creditors.
Fulfilling the IVA and completion
You must meet your obligations to the IVA by making your agreed payments for the five year period and it is important to realise that failure to do so could lead to bankruptcy. At the end of the IVA period your remaining debt is written off and your IVA will be complete. More information on IVAs can be found here.