Advice On Applying For An IVA (Individual Voluntary Arrangement)

If you owe money to a variety of people, and are struggling to meet the repayment, you may want to consider entering into an Individual Voluntary Arrangement, or IVA. It is a legal contract entered into by you and your creditors to repay a certain amount of debt each month, for a period of no more than five years. In order to determine the monthly payment sum, your financial situation is considered along with how much debt is owed. The debts will be considered reconciled once the payment sequence is finalized. Any debt unpaid (based on the original amounts) would be voided.

An IVA is not the same thing as a debt management service. It is a formal agreement between two or more parties, namely you and your creditors. Because this is a legal document, an insolvency practitioner should be consulted. An insolvency practitioner is someone who has been licensed to establish IVAs. An insolvency practitioner can review your current financial situation and advise you as to whether an IVA is a possible solution to your debt problems.

The insolvency practitioner will interview you about your financial situation, in order to determine possible repayment figures. They will then write a proposition that outlines the terms based on the information provided during the interview. After examining the documents for accuracy, you will have to sign them. Once this is done, the courts will accept an interim order on your behalf, which will stop any creditor from pursing legal action based on your debts to them.

Your creditors will then be notified of a meeting to discuss your circumstances with the insolvency practitioner. Creditors usually handle these conferences via mail or fax – not in person. Creditors will be asked to accept or deny the terms of the proposition put forth by your insolvency practitioner. In order for your IVA to receive final approval, at least three-quarters of the creditors will have to agree to the terms.

However, approval does not end the need for the insolvency practitioner. Their job also entails managing the IVA – ensuring that payments are made in a timely manner and in the amounts promised. They also make sure each creditor receives the amount due proportionately. Once the repayment terms have been completed, your debt is considered paid and the burden will be lifted. The fortunate aspect is that not only are people able to save their homes from foreclosure or prevent the loss of property, but up to 65% of the original debt can be written off with the use of an IVA. That money does not have to be repaid, as long as the terms of the IVA are met as promised.