An IVA (individual voluntary arrangement) is a unique option for people in a financial crisis. It is used as an alternative to filing bankruptcy or for people who are in severe debt and live in the United Kingdom.
Who are the benefits of an IVA?
Any person that is having financial hardships and is under a lot of pressure from their creditors to pay the amounts they owe would benefit massively from an IVA. The majority of individuals who file for this type of relief are property owners that do not want to file for bankruptcy and take the chance of losing their homes. Businesses can also use this type of repayment plan under a CVA (Company Voluntary Arrangement). If a business owner thinks their business is going to pick back up and be profitable again, they can use this method of paying their creditors rather than file for bankruptcy and have to wind up their company.
How do you get an IVA?
IVAs by law, can only be processed by a Licensed insolvency Practitioner. The IP would draw up proposals of their repayment plan then submit them to the creditors they owe for approval. A minimum of 75% of the creditors must agree to the arrangement for it to be approved.
A draft of the proposal must also be sent to the court. They would then issue an interim order that would prevent any of the creditors the person owed from being able to take any kind of action against the person until the court had reviewed the proposed repayment plan, and decided if the proposal would be acceptable.
Do all the creditors have to agree with the proposal?
It is not necessary that all the creditors agree 100% with the proposal you have made. You are only required by law to have an acceptance of 75% of the monetary worth to cast votes in your favor. If you have a creditor that decides not to cast a vote, they will be held accountable according to the decision made by the ones that did cast their votes. Once the proposal has been accepted, then it will become a legally binding contract for all parties listed. You and the creditors will be bound by the terms laid out in the proposal.
What if the creditors do not accept the proposal?
Sometimes the creditors will suggest modifications to be made to the proposal before they will accept it. These modifications can include adjustments to the amount you are to pay to them monthly or they may involve how the IVA is going to be managed during the next five years. If the creditors want to make any adjustments you will have the opportunity to accept the modifications they suggest, or the deny them.
Debt requirements for an IVA
There are some requirements you must have to be able to file one of these proposals. You must be a citizen of the United Kingdom. You must owe money to at least 2 creditors and owe at least £15,000 in debt. You must not have the ability to repay the creditors in the manner that was originally agreed upon.
How will I know if I qualify?
If you think that an Individual Voluntary Arrangement could help you the very first thing you need to do is contact a reputable IVA company. They will work with you to calculate a repayment figure you can afford and explain everything in detail. You need to be sure you fully understand the IVA process as your home and personal possessions may be at risk.
What types of debt qualifies?
Almost all unsecured debts qualify to be included in the proposal. Some of the different types of debt generally included are personal loans, and student loans, credit cards, store credit cards, catalogues. An equity in a property or possession of high value may be tsken into consideration, and even some business loans that you are personally liable for. These are not the only types of debt that qualifies but they are some of the ones that are most frequently included.
What types of debt are excluded?
Normally the debts that will not be included in the drafted proposal are secured debts. i.e. arrears on your mortgage or on your vehicle HP will generally not be included. You are not allowed to include the arrears on your council taxes or any fines on these taxes either or rent payments from your dwelling. You will have to make separate provisions for any debts of this type that you are behind on.
How do I apply?
To apply for an IVA simply contact us on 0800 043 2027 and our specialist Advisors will talk you though the process, or alternatively use our free call back service here.