The process
An Individual
Voluntary Arrangement (IVA) is a formal agreement
between you and your (lenders) creditors.
It is generally appropriate for people who
are unable to make their monthly repayments
in full but who do have some money to give
to their creditors each month. An IVA proposal
sets out how you are going to repay your creditors,
usually over a period of five to six years.
The IVA can also take the form of a lump sum
raised from the sale of an asset such as property
or an insurance policy or a contribution from
friends or family.
The
process
IVAs can only
be put together by an Insolvency Practitioner
(IP) - most advice companies will be able
to put you in contact with one but always
ask about their fees and whether you need
to pay anything up front. The firm you choose
will need to ask you a number of questions
about your financial situation in order to
calculate how much you can realistically pay
your creditors each month. They will then
multiply this amount by 60 or 72 months. If
it seems that over this period you could pay
back a reasonable amount of your total debt,
it may be taken that an IVA is a suitable
option for you.
Once proposals for repayment have been drawn up, an Interim Order may be
applied for. Whilst the Interim Order is in place, your creditors cannot
take action against you without asking the Court. A meeting
date will be arranged and full proposals sent
to all creditors who will then have the opportunity
to vote on them. If enough of your creditors
(75% in value) agree, the IVA will become
legally binding. You then make agreed payments
for a number of years (usually five or six)
and providing you have completed your Arrangement
as agreed and once the final payment is made,
your liabilities to your creditors are discharged
in full.
IPs will conduct
regular reviews of your arrangement and try
to help you to complete it successfully.
Many Insolvency
Practitioners will charge you an upfront fee
for putting together the Arrangement. However,
others will not.
For
further information contact one of the following:
Payplan - The Free Debt Advice Agency
Freephone 0800 917 7823
Email: help@payplan.com
Web: www.payplan.com
Citizens Advice Bureaux - www.nacab.org.uk
National Debtline - 0808 808 4000
Money Advice Association
- www.moneyadviceassociation.org.uk
The
Advantages of an Individual Voluntary Arrangement
 You
may only pay back a percentage of your debts
and be free from making further payments after
completion of the arrangement.
You
only have to make one monthly payment.
The
Arrangement is legally binding so that your
creditors cannot change their minds once they
have agreed.
Once
the IVA is in place your creditors cannot
bring any other action against you as long
as you maintain your reduced monthly payment.
The
Disadvantages of an Individual Voluntary Arrangements
IVAs
are only suitable if you have the means of
making your creditors a reasonable offer of
repayment.
Your
creditors have the opportunity to agree or
disagree with the arrangement through a vote.
However, most Insolvency Practitioners will
not suggest this course of action to you unless
they think there is a good chance your creditors
will accept.
If
you do not make the payments to the IVA it
is likely that the Arrangement will fail and
your creditors will be able to take other
action against you.
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