To some people who are struggling with debt an individual voluntary arrangement (IVA) might be an option to help them to start to raise their head above water. But if you decide to apply, what is the process and what are the time frames that you can expect?
What is an IVA?
An IVA is a legally binding arrangement between you and your unsecured creditors. You agree to a single consolidated affordable monthly repayment typically of at least £90.00 a month over a period of time —usually five years. After that, any unsecured debts you haven’t been able to repay are written off.
Is an IVA right for you?
Before you start the process of getting an IVA the first thing you have to do is make sure that you are eligible and that it is the right solution for you. In terms of eligibility, you must be in England, Wales or Northern Ireland. If you are in Scotland then you need to apply for a Protected Trust Deed instead. Typically, you’ll need a minimum debt level of £6,000 of unsecured debt with at least two lenders to potentially qualify for an Individual Voluntary Agreement. Your debt might be across a number of credit cards, loans, catalogues, store cards, etc.
You must be able to prove you’re struggling with your current repayments in order to be considered for IVA payments.
You also need to look at your own individual circumstances as it might be that a different debt solution like – a debt relief order, debt management plan, bankruptcy or budgeting advice might be better solutions for you.
We recommend talking to a debt specialist like Lauren who can help to give you information on the options available to you so that you can make an informed choice. Talking with a debt specialist first about your income and expenditure can also help you in the process of setting up a debt solution.
Getting an IVA the process
If an IVA is the right solution for you, the first step is to find an Insolvency Practitioner (IP). As an IVA is a legally binding solution you will need a qualified professional to support you through the process. The Debt Advice Service refer their clients to their associated companies like the Debt Resolution Service who have many years’ experience helping clients successfully get out of debt.
A statement of affairs
If an IVA is appropriate for your circumstances then a Statement of Affairs is drafted based on the information you’ve already provided. The Statement of Affairs is the consolidated view of your current financial circumstances (assets and liabilities) and forms the basis of your IVA proposal.
The proposal (which is usually drawn up by an Insolvency Practitioner acting as Nominee) will also contain creditor details as well as a breakdown of your income and expenditure and any supporting evidence that you may be required to provide (pay slips, bank statements etc). At this stage, your Nominee may also apply for an Interim Order, which is a legal injunction preventing your creditors from taking further action against you until your IVA proposal has been considered.
Meeting of creditors
It’s when your lenders tell your IP whether they agree to the terms you’ve spelled out in your IVA Proposal. These days, it’s not really a meeting – it’s more of a deadline. Some or all of your lenders may already have told your IP what they think about your IVA Proposal.
At the meeting, your creditors will vote on whether to accept or reject your proposal. 75% of the votes (by value of debt) must be in favour of the proposal for it to be approved. If this happens, all of your unsecured creditors, whether they voted yes, no or didn’t vote at all, are legally obliged to abide by the terms of the IVA agreement.
Once approved, all the relevant parties are informed and a supervisor is appointed (usually this is the same Insolvency Practitioner that acted as Nominee) to monitor monthly payments and make sure you are abiding by the terms of the IVA.
How long will the IVA process take?
The IVA process usually takes about six weeks from start to finish but this is highly dependent on how quickly you can send the necessary supporting evidence to your debt specialist.
To find out more about an IVA contact one of our debt specialists today on 0800 254 5112