Many people are asking questions such as “How does an IVA work?”
Here we’ll answer this question for you so you can have a better understanding of how individual voluntary arrangement work as a debt solution.
The breakdown of how an IVA works in terms of the process can be broken down into stages
Generally the process of setting up an IVA takes around six weeks from beginning through to completion.
Here are the stages at a glance with some detail on how it all works:
1) Ascertaining if an IVA is the right debt solution for you: The “Free Debt Assessment” – this is what takes place when you make contact with the advisers’, they will go through your debts’ with you, assess your level of debt, the type of debt & ask you to explain your personal circumstances, once this process is completed the adviser’ may recommend a solution there and then to help with your debts or want to assess things further before recommending a solution to offer you the best possible solution to your debt.
2) If it is decided that the IVA is the right solution for you and your debts, what is known as a “statement of affairs” is drawn up taking into account the information gathered from your debt assessment with the adviser’. This includes the following items “assets and liabilities” “income” and “total debts” along with a summary of the situation (on occaision), once this is completed a proposal is drafted by an insolvency practitioner (IP) acting as the nominee to help with your debt. This is the stage where the IP acting on your behalf can apply for a legal injunction giving you relief from creditors’ pursuing you for repayments of your debts.
3) If you are then happy with the proposal, the proposal document is sent to your creditors, the insolvency service, and the local county court, once this proposal is sent to all three relevant parties’ what is known as a “creditors meeting” will take place, this is where the creditors meet with the insolvency practitioner to discuss the proposal and shortly after a decision is generally made as to whether or not the proposal is agreeable (sometimes this decision can be deferred in exceptional circumstances if the meeting is adjorned).
4) At this meeting if 75% of the creditors vote in favour of the terms of the IVA, the rest of the creditors (even if they did not vote in favour of the IVA) must abide by the terms of the agreement and thereby agree to be legally bound by it.
5) Once the creditors have reached an agreement to the IVA (to a majority of 75%) then an insolvency supervisor is appointed and all relevant parties are informed that the IVA debt arrangement has been agreed and therefore the process will go ahead and you (the debtor) will enter into an IVA.
The individual voluntary arrangement must be adhered to by all parties (including you, the debtor) in order to remain valid, so it is very important to keep up with the repayments, in the event it may not be possible to make a repayment for one particular month you must inform your insolvency practitioner immediately to see what short term measures can be put in place to help you.
Communication and committment is key with an IVA, but there are many benefits to an IVA, including the following but not limited to:
1) Halts’ creditor hassle and chasing
2) Protection of assets (management of unsecured debts)
3) Consolidation of monthly repayments (pay less towards your debts’ each month)