An IVA is a legally binding contractual agreement between an individual and their creditors, overseen by an insolvency practitioner (who will firstly act as your Nominee and following approval as the Supervisor of the arrangement). The agreement normally allows for an income contribution to be paid for a period of 5 years (can be longer, if required) and will also include your owned assets, if applicable. Following successful completion of the arrangement, you will be discharged from all remaining debts and can look forward to a debt free future.
First of all, you should take advice from a licensed insolvency practitioner. After it is agreed that you will proceed with an IVA you will prepare a proposal with the help of your nominated insolvency practitioner who, at this stage, will act as your Nominee.
The IVA proposal is considered by creditors in the following way:
· The proposal contains details of your income and expenditure, Statement of Affairs and other statutory documents.
· A meeting of creditors will then be called and your creditors will vote to accept or reject your proposal.
· For the IVA to be approved, 75% in value of voting creditors must agree to the proposal, provided this is achieved then the IVA will proceed as agreed.
· If agreed, then all of your creditors will be legally bound to your IVA.
· If agreed, your Nominee will then act as your Supervisor to ensure you adhere to and fulfil the terms of the IVA.
· The meeting of creditors could be adjourned for a maximum period of 14 days to clarify any issues raised by creditors.
· If the IVA proposal is rejected, you can reconsider your position and make an amended proposal to creditors or you can consider one of the other available solutions.
Once approved, your Supervisor’s main duty is to collect your income contributions for a 5 year period, realise your assets and, in general, supervise proceedings to ensure the IVA performs as per the terms of the arrangement.
From the funds collected, your Supervisor will also make periodic payments to your creditors, as per the terms of the arrangement.
It is essential that you co-operate fully with you Supervisor for the duration of your IVA by providing all requested information, keeping your Supervisor up to date with any changes to your income or expenditure, advising of any changes to your contact details and, as far as possible, maintaining your agreed payments. In any event, your Supervisor will review your income and expenditure at least annually.
At the end of your IVA you will be discharged from all remaining debts and can look forward to a debt free future. If, for whatever reason, you are unable to fulfil the terms of the arrangement then you would be issued with a termination notice meaning you will be handed back your debts and will need to consider other options, such as bankruptcy.Do I Qualify
Contact an expert money adviser at Harper McDermott to find out more about the debt solutions available to you. We are here to help you decide the best course of action to suit your individual needs and support you every step of the way. If you would like a fresh start, get in touch today!