What happens in an IVA?
Once you have decided that an IVA is right for you, a debt advisor will review your financial status and work out how much you will be able to offer your creditors (this amount will be tailored to your personal circumstances).
At this point the advisor will indicate to you whether you are likely to be accepted for an IVA. If the debt advisor agrees that an IVA is right for you, a statement of affairs will be drafted (income, expenditure and your debts) to be passed to an Insolvency Practitioner. The Insolvency Practitioner, also known as an IP, will represent your case to the creditors.
The Insolvency Practictioner
The IP will draft an IVA proposal to put to your creditors, the proposal will include details about your debts and background. At this point the insolvency practitioner will explore all other solutions to make sure that the IVA is the best solution for you, once agreed you will be asked to sign the proposal to state that it is the best offer that you can make to your creditors.
The IVA proposal is now forwarded to your creditors, this gives your creditors a chance to review the offer being made in the IVA, the creditors can either agree, decline or request modifications to be made to the proposal. If a modification is requested, your IP will contact you with the new details. Approximately 2-4 weeks after this stage then a creditors meeting is held.
At the creditors meeting, for an IVA to be accepted at least 75% share of the money that you owe must vote in favour of the IVA, 75% refers to those of your creditors who actually vote, those that didn’t will be bound to the IVA whether they chose to vote or not. Although it is called a creditors meeting, your creditors may not necessarily attend the meeting but will offer their acceptance of the proposal in writing.
The IVA is accepted
Once your IVA is accepted, the court and creditors are informed of the outcome from the meeting, you will be appointed a supervisor (normally the IP) who will ensure that the repayments that you are making during your IVA are distributed to all your creditors on a pro-rate basis and both you and the creditors adhere to the proposals that were included in the IVA.
You will now be required to maintain your agreed monthly payments for the required length of time (usually 5 years). After the 5 year period, you will have completed your IVA, assuming that you have complied with the IVA, you will now be discharged from the IVA and all liabilities that were included with it. Any outstanding debt that is left after the 5 years will be written off. You are now debt free.