Irwin & Company,
If you are facing bankruptcy, know there is another option. An Individual Voluntary Arrangement (IVA) is an agreement between an individual and their creditors and an alternative to bankruptcy. It is a formal agreement allowing you to pay back your debt over time. Under this procedure, a licensed insolvency practitioner is appointed as nominee to prepare a report on proposals to be put forward to creditors. Under certain circumstances, such as threat of legal action, an interim order can be sought from the court upon its consideration of the proposal which will provide protection from creditors taking further action.
IVAs are flexible meaning you can adjust the agreement to suit your needs. But it can also be expensive with other risks so you should consider the negatives as well as the positives before choosing to form an individual voluntary arrangement. An IVA is a formal and legal solution to debt. This means the court recognises and approves of the agreement and your creditors have to stick to it. It’s a form of insolvency but is different from bankruptcy in the following ways:
There are also similarities between IVAs and bankruptcy including:
Only someone qualified can set up an IVA. This person is known as an insolvency practitioner – either a lawyer or an accountant – and they will charge a fee to complete the IVA. They deal with your creditors throughout the lifespan of the IVA.
Your insolvency practitioner will look at your finances to see if an IVA is likely to be approved for you. They will consider your expenditure and calculate how much money you are able to offer your creditors. They will help you create a proposal for the IVA, discussing what the agreement will mean for your home and assets. Your insolvency practitioner is the go-to person if you have any questions or concerns as they are authorised by a regulated, professional body.
Once you have your proposal and it is accepted, you must add monthly payments to the IVA to repay your debt. These payments go directly to the insolvency practitioner who then forwards the correct money to the creditors while taking a percentage as fee payments for themselves. This percentage is agreed before the IVA comes into place.
First, you need a budget. Your proposal is based on your monthly income and necessary living expenses. The budget is based on the money available after living costs have been deducted.
The purpose of an IVA is to help an individual get out of debt, while providing creditors with a fair deal. So, while luxury living is often out of the question, the IVA isn’t designed to make you struggle financially. Your budget allows for things like bills, food, rent, childcare, travel, school expenses, and clothing.
To create the proposal, there is a lot of information your insolvency practitioner will require. It is useful for you to gather this information before contacting them to make the process faster and smoother. Common types of paperwork they require involves:
Your insolvency partner is a professional and is responsible for carrying out most of the work to set up and continue an IVA. If your IVA is agreed, you will no longer have to talk to your creditors, only to your insolvency practitioner.
For the proposal to be accepted, 75% of creditors must vote for it. Any creditors who disagree are still bound by the decision. Creditors can ask for changes to the proposal at the meeting. The creditors who you owe the most money to have the biggest say.
The creditors consider a number of things prior to approval including:
Creditors want to ensure you’ll be able to meet the IVA requirements and pay them.
There are a number of advantages to this process:
Most IVAs do last five years, however, this isn’t always a guarantee if you miss payments or aren’t able to remortgage.
As long as you have met all the conditions of your IVA, your creditors won’t be able to make any further claims against you and the balance of any unpaid debt is written off. You will receive documentation to confirm you have completed the IVA and a report will go to your creditors.
Irwin Insolvency is home to many experienced insolvency practitioners who can help you navigate the insolvency process. If you want to avoid bankruptcy, an individual voluntary agreement could be the right choice for you. Our practitioners will assess your situation and determine whether an IVA will work for you, then get started working on your proposal. All you need to do is provide us with the correct information, fostering a relationship built on honesty, and we will take care of the rest. If an IVA isn’t the right option for you, we have the knowledge and expertise to find out what is the best plan to relieve you of your debt
For more information, get in touch with Irwin Insolvency by calling 0800 009 3173 today.