The Big IVA Questions
While many people struggle with the burden of debt which they are unable to afford to repay, most will try to avoid bankruptcy at all costs and it is understandable that they would wish to do so. For people whose debt problem is becoming ever more serious, this short yet informative article on Individual Voluntary Arrangements may be of some interest and some use. It may be the case that an Individual Voluntary Arrangement is the right solution for you. Read on and find out for yourself.
What is an IVA?
An Individual Voluntary Arrangement, or IVA for short, is a debt solution; an alternative to bankruptcy.
Through an IVA you can work with your creditors to develop a constructive, mutually beneficial solution to your debt problems, which you can afford to pay, and will reach a final, legally binding settlement. You replace your debts with a single monthly repayment which you can afford to pay. You’ll make this payment for a maximum five years, after which time the arrangement is complete. Any remainder of debt, still in place after the end of the term, will be written off.
A monthly IVA payment can begin as low as £150, which is often considerably lower than the sum of all of your debt repayments.
A person in debt might consider an IVA if their unsecured debts amount to £12,000 or more, if they live in England, Wales or Northern Ireland and if they have a disposable income of £150 or more.
How do I start an IVA?
An IVA is simple to begin. First, find an Insolvency Practitioner to handle your case. Your IP will discuss your situation, calculate the amount that you can afford to pay toward your debts and prepare an IVA proposal document containing information which includes your personal info, you current financial situation and the amount that you can afford to pay.
Once you have approved this proposal form, your IP files an Interim Order, which means that your creditors are unable to issue bankruptcy proceedings against you until a vote has been taken on your IVA.
Your IP then conducts a meeting with representatives of all your creditors and a vote is taken as to whether to accept your IVA proposal. A majority of 75% is required for the IVA to be accepted. If this is achieved the IVA is legally binding for all of your creditors.
The supervisor appointed at the creditors meeting then administers your arrangement and ensure that all necessary payments are made and maintained.
