Individual Voluntary Arrangements (IVAs) differ from most other forms of debt help in that they form a binding legal agreement between debtors and creditors. Because of this, the process of getting an IVA is a little more complex than, say, setting up a debt management plan. This article will provide you with IVA advice and it will guide you through the process of getting an IVA.
Because an IVA is a legal agreement, it has to be set up by a licensed insolvency practitioner who will give you all the IVA advice you need. The insolvency practitioner that you choose will offer you IVA advice and guide you through the IVA process from your first meeting to your final payment to your creditors.
Initially, the IVA process involves an assessment of your financial circumstances. Perhaps an IVA isn?t the right option for you, and getting some IVA advice will help illuminate that point. For example, if your debts are below £15,000 or you can not repay at least £200 every month you will not be eligible. There are other restrictions too, which your practitioner will explain to you in detail. This stage of consultation and IVA advice should be free of charge and if you agree that an IVA is the right option for you, it is time to move forward to the next step.
Preparing a Proposal
The first thing your practitioner will do after consultation and after giving you IVA advice is prepare a proposal for your creditors. This proposal should provide details of your income, how much can be repaid to the IVA, details of how the debt problems occurred and other information that the creditors will require. Your practitioner will also require the number of creditors you have and their details, information about your assets, and a tally of your monthly incomings and outgoings. These details will help your practitioner formulate a realistic repayment plan and will help them give you the best IVA advice for your circumstances. One of the chief advantages of an IVA is that all your repayments can be combined into one single monthly repayment that you can afford. Although the five-year term of the agreement can be a little daunting, an IVA can be a relatively easy way out of the debt quagmire.
Once you have read, approved and signed the proposal, and it has been finalised, your practitioner will file an interim order with the courts which will protect you from any legal or bankruptcy proceeding relating to your debts.
Negotiate with Creditors
Once the proposal has been signed off by you and your insolvency practitioner, a copy is sent to each of your creditors who have two to three weeks to assess the proposal and make a response.
You then meet with creditors, and they vote on the proposal. If they are agreeable (75 percent of creditors, by value of debts, will have to approve) you may have to negotiate the final terms of the IVA. Your insolvency practitioner will act as a chairman in these meetings. IVA proposals are rarely accepted straight off and creditors usually seek to impose a number of conditions. These commonly include a minimum return, an increased return if your income increases, a restriction preventing you from acquiring more credit, and the cessation of the IVA if you miss a certain amount of repayments.
Approval of an IVA
Once the IVA proposal has been approved by creditors, you are almost there. You will have to pay the agreed amount into a fund each month. This money will be divided proportionately among your creditors, and the fund will be supervised by your insolvency practitioner.You may have to respond to requests from your practitioner during the term of the IVA. The practitioner will make an annual report to creditors and the court. The supervisor must also ensure that you're keeping up with repayments, and they may occasionally ask to examine bank statements, wage slips, etc.
After this, it is up to you to keep up with monthly repayments. If you do so, then no more interest should be charged and all debt will be written off at the end of the five year term.
Getting an IVA is certainly regarded as one of the more complex debt help solutions but its long term benefits can be significant. In many ways it provides a much more agreeable alternative to bankruptcy and can result in as much as 75 percent being written off your debt, depending on your circumstances.
If you would like assistance finding an IVA specialist to speak with, take a moment to fill out this short debt form, and we will contact you shortly to introduce you to a qualified IVA adviser from the SimplyFinance network.