What is an IVA Variation?

What if your financial conditions change drastically during the process and you can no more adhere to the terms agreed upon for IVA? This is very likely to happen because of the recent downfall in the economy that has severely affected all the major countries of the globe including the United Kingdom.
There is a possible solution for this problem, which lies in IVA Variation.

IVA Variation is simply a revised offer or a revised IVA according to your current financial circumstances. It comprises of a new proposal detailing the changes in your financial conditions.

Your Insolvency Practitioner will be the person who devises this proposal and works out till the acceptance of an IVA variation.

What is a Variation Meeting?

It is a meeting between the Debtor and the Creditors, regarding the proposal of IVA variation. Your IP will prepare a report describing the changes in your financial status and explaining why the original proposal is no longer practicable for the Debtor.
This report will be presented to the Creditors. IP must send a notice to the Creditors at least 21days prior to the meeting. The process of voting for the acceptance of IVA variation is also carried out during this meeting.

How Does the IVA Variation Work?

If your Insolvency Practitioner believes that you need an IVA variation, he will make a new proposal according to your current fiscal situation.

This proposal is then dispatched to all the Creditors for consideration. The Creditors are then requested to attend the variation meeting fixed on a certain date.

The IP will explain every detail of the change in your circumstances as well as the new proposal.
The voting process work is exactly the same as in the initial Creditors meeting i.e. at least 75% of the Creditors must agree to the terms and conditions presented in the new proposal.

What if the Creditors deny my Variation Request?

There are chances that you may not be able to get the required number of votes from the Creditors consequently, the request for IVA variation may be rejected.

Don’t lose hope if such a situation takes place. You can come up with an alternative IVA variation along with a different proposal. However, if your Creditors still don’t agree to your new proposal and you are unable to keep up with the terms agreed upon, the IVA will fail. In this situation you may consider other Relief Options i.e. Debt Management Plan.

How can an IVA help me?

Individual Voluntary Arrangement (IVA) is a legal relief program. It is suitable for the people with a large amount of outstanding debt.

Instead of paying your debt lump sum you have to formulate a repayment plan with your creditor. This will enable you to pay a monthly installment according to your comfort.

IVA usually lasts up to five years and at the end of this period your Creditors write off all the outstanding unsecured debts. At least 75% of the voting Creditors must accept the terms.

You should remember that IVA blemishes your credit report and it will be shown up on the said report for six years. Unlike bankruptcy, you do not risk your home or other assets to the Creditors however, you may have to release the equity in the last year of the IVA. One more thing to bear in mind is that you are not considered eligible for obtaining any further credit during the period of IVA.

An Insolvency Practitioner (IP) plays the role of a mediator between the Creditors and the Debtor. The Debtor pays the monthly installment to the IP who then disburses this amount among the Creditors accordingly.
However, five years is a huge time span and there is no guarantee that your condition will remain the same throughout this period.

Consider an IVA as a possible solution but as a serious matter.
Always ask at least three different opinions by certificate advisors and compare prices and conditions.

An IVA could be very helpful but a failure of the agreement could force you to a Bankruptcy.

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