Can’t afford IVA payments in Oxford?

IVA (Individual Voluntary Arrangement) has unimaginably changed the situation of the debt ridden people of UK, especially the people of Oxford, a city of Oxfordshire and finding no way to repay it. Thanks to the UK government that had brought this debt solution into effect in 1986.
An IVA is a contract between the debtor and the creditors. In this, the debtor voluntarily accepts his incapability of repaying the debts owed and puts forth an amicable proposal in which, he is ready to clear off a certain portion of the debt on a monthly basis over a certain period (it can go to a maximum of 60 months). The minimum amount fixed for Oxford is 40% of the total debt.

This proposal is prepared by a Licensed Insolvency Practitioner, who takes note of the financial condition of the debtor, calculates his income and expenditure and provides ways to set a certain amount of the income towards the debt repayment every month. When the proposal is drafted and signed by the debtor it is sent to the court for its approval.

Once approved the creditors are circulated a copy of the approved proposal. These creditors then attend a ‘Creditors’ Meet’ to discuss and decide on the proposal.
If 60% of the creditors agree to it the IVA comes into effect and the debtor begins to make the monthly payments as agreed upon. This amount he is not supposed to make directly to the creditor. It is to be paid to the IP who will then distribute it among the creditors on a pro rata basis i.e. depending upon their due amount.

This would continue till the end of the agreed period and once the last payment is made, the court is duly informed along with necessary documental supporting. The court then endorses it with a ‘Completion Certificate’. Now the debtor is free from all debts.
Everything seems to be fine and perfect. But there is no surety at all. Since the debtor’s income and financial situation is the backbone for the successful completion of an IVA, what will happen if his situation changes dramatically? This is the big question that hovers in the mind of debtors in and creates a sense of fear. And this situation is prevalent more so in Oxford as it is a highly vulnerable city where the situations fluctuate drastically.
The solution for this is an IVA Variation. Yes, while setting up the IVA scheme, this provision too has been provided by the Government. This shows the perfect analysis of changing situations, done before finalizing the IVA solution.

When there is a sudden downfall in the debtor’s financial situation that may occur due to many reasons and the debtor realizes that he cannot afford to make the agreed upon amount, he puts it before the IP. The IP then analyzes the situation and if he is convinced about it, he would prepare a revised proposal of the IVA with amendments in certain points (mostly it is the repayment amount and period that is involved). The creditors are then informed and so also the court. If the court is agreeable on the revision the creditors once again meet up in the ‘Creditors’ Meeting’ and discuss on it
It is the IP’s responsibility to put it before the creditors and bring in an amicable decision on the IVA Variation. If 75% of the creditors agree to it the revised IVA is then followed upon till the agreed period. If not, the IVA is considered as ‘Failed’ and the debtor has to opt for other debt solutions. In such situations, he runs a risk of facing a bankruptcy filed by the creditor(s).

On the contrary, if the situation of the debtor improves and he has now got a higher amount of disposable income, then also he can go for an IVA Variation. With this he can change the clause of repayment with a higher amount per month for a lesser period or alternatively he can also go for a one time settlement. But normally these situations are very few.

Once an IVA is acted upon, the debtor has to take all measures to make it successful. For this he needs to make little to moderate change in his lifestyle.
He has to keep in mind that it is a legally binding contract that he has entered into and that he has to religiously discharge his responsibility to make the IVA a success.
He should stop all extravagancies.
He should spend every penny after proper calculation and only if it is very essential and goes into the essential expenditures. Remember, the IP is keeping a strict vigil on the debtor’s income and expenditure and that an annual review and report has to be prepared and submitted that would display your expenses.
Any celebrations should be at its minimal.

Be informed that though lesser than the effect of Bankruptcy but still, IVA too has an adverse effect on your credit rating that would remain till the period of the IVA +1 year.

If you are a resident of Oxford and need debt help and debt solution you can contact many of those Debt Help Service operating in Oxford or those providing services through online.

Critchleys Greyfriars Court, Paradise Square, Oxford, OX1 1BE, Tel: 01865 261100 Fax: 01865 261201 Email marketing@critchleys.co.uk

Darbys Mallam Lewis, Solicitors & Legal Advice, 50-52, New Inn Hall St. Oxford, Oxfordshire, OX1 2DN Tel. No. 01865 247294

Helpline operating in Oxford is The UK Insolvency Helpline. For more details log on to http://www.insolvencyhelpline.co.uk/debt_advice_uk/oxford.php

Post a comment