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We've already outlined our IVA advice the IVA or Individual Voluntary Arrangement, given its likely timescale, as well as an overview of how one can proceed. Here we discuss the procedure for an IVA in more detail to help give a better understanding of what's involved.
Interim Order
As discussed previously, your IVA proposal will be set up with help of a Debtsolver licensed Insolvency Practitioner or IP. Once he or she has agreed to go ahead with an IVA proposal your Insolvency Practitioner may apply to the county court for an “Interim Order” if it is felt that you need immediate protection from your creditors.
However, in the majority of cases this is not required. Once an interim order has been established your creditors cannot pursue any bankruptcy proceedings against you or initiate any new ones.
In fact whilst an interim order is in place, they are not allowed to take any other debt enforcement action against you without the express permission of the court.
Creditors Meeting
After our iva advice and assessing your circumstances and collating the necessary documentation, your Insolvency Practitioner will prepare an IVA agreement and send it to your creditors calling them to a meeting. By law, they must be given at least 14 days notice to attend the meeting. It’s important that you check to ensure that your creditors have been informed of the meeting, because if they haven’t been notified of it they are not bound by the terms of the IVA and can later take out separate proceedings against you to recover their debts.
The “Creditors Meeting” will take place not less than 2 weeks, but usually no longer than 4 weeks after the IVA proposal has been drawn up and sent out.
In the meeting, which will usually be chaired by your Insolvency Practitioner, the creditors will vote on whether or not to accept the IVA proposal, reject it, or call for it to be amended. There may well be some haggling over the exact terms of the IVA. You will not normally be needed at this meeting because the Insolvency Practitioner will act on your behalf, but you it would help if you stay close to a telephone at the time that the meeting is scheduled.
In fact your creditors may not attend the meeting either, instead asking the Insolvency Practitioner to cast their vote by proxy.
Creditors Vote on the IVA Proposal
After considering your IVA proposal the creditors will vote on it. For the creditors to agree on an IVA, 75% of them “by value” must agree to its terms. “By value”, means that the votes are not based on a simple head count, but are weighed by the amount you owe to each creditor. For example, if you owe 75% of your debt to a single creditor then they would have the casting vote on your IVA proposal regardless of the number of other creditors.
If the IVA proposal is accepted, all creditors are bound by law to accept it regardless of whether they approved it or not, and they cannot take any further action against you if you stick to the terms of the IVA. If a new creditor appears after the IVA has started, they can demand the amount they would have received had they been included at the beginning of the IVA.
Once your proposal is accepted, your creditors will usually ask your Insolvency Practitioner to supervise the IVA, and you will make a single monthly payment into a fund that he or she will manage.
It’s vital that you keep up with the payments, otherwise the IVA could be declared invalid and your creditors would very likely sue you for bankruptcy. Let’s be fair to your creditors. If they are prepared to write off a large part of your debt, and you still don’t make payments, what else can they do? They will literally give up and apply for your bankruptcy, to get some of their money back
It is very important that you inform your Insolvency Practitioner of any changes in your circumstances.
After the duration of the Individual Voluntary Arrangement, your debts will be written off, your creditors will be unable to pursue any further action against you – and you will be debt free.
To find out more about how an IVA can help you solve your debt problems, call us anytime 24 hours 7 days on 08000 434 336, or use our online application form.
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