IVA Process explained

An Individual Voluntary Arrangement is an agreement with Creditors to resolve the debt; it is comprised of detailed steps.

The Insolvency Act of 1986 implemented this program as a way for citizens to pay off their debt and restore their credit to a satisfactory standard.

An IVA can be arranged before or after a Bankruptcy order has been made. We will now discuss the process of an IVA in detail.

Initiating an Individual Voluntary Arrangement

The Individual Voluntary Arrangement begins with the person in debt contacting an Insolvency Practitioner whom will draft a proposal for the Creditors.

During this time the person in debt may request that the Creditors defer payment to a future date.

Once the proposal is drafted your Insolvency Practitioner will act on your behalf in requesting that your proposal is accepted.

Details of the Proposal

Your proposal is essential in your efforts to receive an IVA. The Insolvency Practitioner should include in the proposal why you deserve an IVA, he should give reasons for the Creditors to agree with.
Your IP must also provide the details of all of your debts, assets and other liabilities.

The Nominee

The Nominee in an IVA is the Insolvency Practitioner, it is his job to prepare their report for the Courts and he will also head the meeting with the Creditors and file the appropriate paperwork with the Court afterwards. The IP needs to have access to your financial records and your bank accounts so that they may make all the proper arrangements to help you clear your debt.

The Interim Order

After the proposal has been made to your Creditors you will have to apply for an Interim Order. The purpose of an Interim Order is to prevent Bankruptcy proceedings.

The Court will make an Interim Order only when the following criteria are met:

  • Intent on filing an IVA proposal.
  • You are able to file for Bankruptcy.
  • No prior applications have been made in the last year.

The Interim Order serves as a time allowance, it is typically in effect until your Creditors meeting.

The Nominee’s Report

Just before the Interim Order expires the Nominee will need to obtain a report dictating his opinion on whether or not a meeting with your Creditors is merited and deserved.

If your Insolvency Practitioner does not recommend that a meeting is held they must provide reasons for this denial and suggest an alternative to filing for Bankruptcy.

Creditors Meeting

Once a meeting with your Creditors has been approved they are sent copies of your proposal and are now ready to decide if you they will approve your IVA.

Chairing this meeting is your Insolvency Practitioner. During this time it is possible for changes to be made to your proposal with your permission.

You will need a 75% vote in favor of your proposal to be approved for an IVA.
At the close of the meeting your Insolvency Practitioner is now responsible for providing the Court with the details of your arrangement to the Secretary of State for registration.

If your Proposal was Not Accepted

In the instance that your Creditors do not approve your proposal for an IVA your Interim Order will continue to be in effect until it is released by the Court upon receiving the Insolvency Practitioners Report.

If your Proposal is accepted

After a successful meeting with your Creditors you are able to begin paying off your debt in accordance with your IVA plan.

All Creditors are now legally bound to this agreement whether they agree or not.

As long as you maintain your part of the arrangement you will no longer receive any of those harassing letters or phone calls.

Do Not Default on your IVA

Defaulting on your IVA in accordance with the Insolvency Act of 1986 is immediate grounds for a Bankruptcy Order.

Any member involved in your IVA agreement may issue the Bankruptcy Order.

Bearing False Witness

If at any time you seek to deceive your Creditors, your Insolvency Practitioner, or the Court in an effort to gain an approval for your IVA you are acting against the law and you are subject to criminal proceedings.

If evidence is brought against you the case will be brought forth to the Criminal Allegations Liaison Team in London.

Individuals found guilty are subject to incarceration and/or fines.

Registering for Voluntary Arrangements

A database of all registered IVA’s is kept by the Insolvency Practitioners Unit in Birmingham and is a public record.

Members of the public may search this database at any time by accessing the following link: www.bis.gov.uk/insolvency.

Under the Fees Order of 2004 there is a fee of £35 to be paid to the Secretary of State for the registration of an IVA.

An IVA is a very specific thing and does not come for free, it must be evaluated extensively by an expert. We recommend you seek professional advice. You can seek initial support to recognize debt help charities or licensed IVA Firms.

Post a comment