Welcome to Debt Solution 4 U |
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Individual Voluntary Arrangement (IVA) |
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An Individual Voluntary Arrangement (IVA) is legally binding solution to personal debt problems governed by the Insolvency Act of 1986. |
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Anyone can consider an IVA to solve debt problem provided debt is above £12,000 and have 3 or more different creditors. Furthermore you should be able afford to to pay £180 a month. Certain types of debts may need different approach. |
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A Licensed Insolvency Practitioner (IP) by law has to prepare IVA proposal. A full review of financial situation will be carried out to calculate realistic and fair monthly offer to all of the parties concerned. A formal written proposal will be drafted for the creditors detailing all the debts and the period of time. Once agreed, the document will have to be signed by the debtor, witnessed by a solicitor or a commissioner for oaths. |
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Proposal will be distributed to Creditors for approval. No amendments to the proposal can be made without debtor's agreement. The creditors will have an opportunity to discuss the proposal at a prearranged meeting. The proposal becomes legally binding for all the creditors provided 75% of the value of the creditors accept the offer in writing or in person. Once the offer is approved by the creditors, it has to be register at a local county court and all the creditors and the court are formally informed of the result of the meeting. Insolvency Practitioner is normally appointed as the supervisor of the Arrangement to monitor monthly contributions, supervise the disposal of any assets and fulfil creditors' requirements. The whole procedure will normally be completed within six weeks. |
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Once the IVA is agreed, the creditors are no longer allowed to demand payments by any means. All types of contact from creditors are stopped by law. The IVA is legally binding on all the creditors. The creditors can not add further interest, charges or make sudden changes or demands on the accounts covered in the IVA application. Creditors are not allowed to take further legal action such as County Court Judgements as long as the terms of the arrangement are maintained. |
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The agreed payments must be made to the Insolvency Practitioner to distribute to all creditors on a pro-rata basis in accordance with terms agreed and until the successful completion of the IVA period. The payment has to be maintained to avoid the failure of the IVA. Failure of payments must be avoided at all costs. Contact Insolvency Practitioner immediately if difficulty arises in making the agreed payments to re-negotiate with creditors. |
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IP will normally conduct reviews regularly once a year to check circumstances and ability to maintain monthly payments. If circumstances have not changed, then payments are continued as normal. If for any reason situation have improved then monthly payments will be increased accordingly. |
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If for any reason monthly payments cannot be maintained for a short period, it is possible to agree with the IP to add the payments for the miss out period at the end of the agreement. Creditors often stipulate that no more than one or two payments can be missed during any 12 month period. |
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Should the circumstances changes for worse during the IVA period due to lose of job, change job for less pay due to unforeseen circumstances, hospitalisation etc and payments cannot be maintained, IP can ask creditors to consider to vary the terms of the proposals provided regular payments are maintained. It will be at Creditors discretion to accept such changes. |
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Somehow, if payments cannot be resumed, IVA will obviously fail. Creditors will evidently take further action. An alternative arrangement will have to be made to avoid supplementary actions that may be taken by the creditors. |
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The IVA proposals allows an agreement with your creditors to make a single reduced minimum payment of £180 a month to settle debts within a fixed period of time, normally 5 years (60 months). The repayments are calculated taking into account assets, liabilities, income and the cost of living expenses. Personal debts to the Inland Revenue and VAT can also be included but may be treated preferentially within the proposal. All interest and charges are frozen. After the successful completion of the IVA arrangement, any outstanding balances are written off. This is known as a composition of debt. However cash windfall or lump sum is received while in an IVA, it may be possible to offer your creditors a settlement figure and complete the arrangement sooner. |
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It is important to note that the property owner with an endowment policy linked to the mortgage will be expected to cash it in and pay the proceeds into the arrangement. Similarly if there is equity on the property or any other significant valuable assets, some or all of the equity will have to be released most likely at the end of the arrangement to pay the creditors. |
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Once IVA is undertaken Store or Credit cards will not be allowed during the IVA period any such cards will have to be destroyed or return back to the appropriate owner. Furthermore, additional unsecured borrowing will not be allowed again until IVA arrangement is successfully completed. It may however be possible to change an existing mortgage or to take a new mortgage while in an IVA but make sure to get advice form Insolvency Practitioner. Credit rating will be repaired quicker by undertaking IVA and does not mean Blacklisted for ever. Once IVA is successfully completed credit rating will be restored and you will be able to borrow again. |
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When IVA is undertaken, it is a private matter between debtor and creditors. IVA is not published in the local news papers or in any other media. No-one is informed about the IVA except the creditors. Professionals such doctor, solicitor, accountant, company director, member of the police, armed forces etc can carry out an IVA without any adverse effects to the job. |
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