Debts Over £15,000
IVA Facts & how IVA's work |
Backround facts on IVA's (Individual Voluntary Arrangement's) and how they work |
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| What Is An IVA? |
| An Individual Voluntary Arrangement is often a preferable alternative to bankruptcy from both your point of view and that of the creditors. In practice most creditors try not to resort to bankruptcy petitions. This is because the fees associated with bankruptcy are high and, unless there are significant assets to be realised within the bankruptcy, there is often little left for the creditors. |
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| Will I have to pay for this service? |
| Unlike most fee charging organisations when you consider an IVA through the UK Insolvency Helpline, you will not pay any upfront fees. The monthly payments that you make into your arrangement will cover the payments to your creditors as well as our fees for putting together and supervising the arrangement. In short, the creditors agree that they will accept a lower return from the arrangement. In addition you only start paying once your arrangement is agreed so if we are unsuccessful, you will not have to pay for the work that we have done for you up to this point. If you would like more information about this please call us and one of our advisers will be happy to explain it in more detail |
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| What are the advantages? |
- You may only pay back a percentage of your debts
- You only have to make one monthly payment or in some cases, a one-off lump sum
- The Arrangement is legally binding so that your creditors cannot change their minds once they have agreed
- Once the IVA is in place your creditors cannot bring any other action against you as long as you maintain your agreed monthly payment
- You are able to operate a 'normal' bank account as long as it does not have an overdraft facility
- No publicity in the local papers
- It may safeguard your property
- Does not affect the ability to hold public office
- An IVA does not affect your professional status
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| What are the disadvantages? |
- IVAs are only suitable if you or another person can afford to make an offer of repayment to your creditors
- Your creditors have to agree on the arrangement through a vote, However we will not suggest this course of action to you unless we think there is a good chance that your creditors will accept your offer
- If you do not make the payments to the IVA it is likely that the Arrangement will fail and your creditors will be able to take other action against you. It may also result in your bankruptcy
If we feel that an IVA is not the most appropriate solution for you, we will suggest an alternative.
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| The Process |
| In every case, the first step is to assess whether an Individual Voluntary Arrangement is the most suitable arrangement for you. If we feel that it is not or you decide that it is not what you want to do, we will always suggest an alternative. |
| Once we have established that an IVA is appropriate, we will work together with you to determine how much you can realistically afford to pay into an arrangement. To do this we will need to ask you a number of questions about your financial situation. We will then discuss the figures with you and agree on a monthly repayment to your creditors. Other aspects of your financial situation will also be discussed such as the value of your assets. We will also need to ensure that all your creditors (lenders) are included within the arrangement. |
| When your proposals are drawn up and you are happy with them, you will need to sign them and get them witnessed by a solicitor or a commissioner for oaths. We will then make an application to court for an Interim Order. When this is in place your creditors cannot take any action against you and we can hold a meeting so that your creditors can consider your proposals. If enough of your creditors (75% in value of those creditors who vote) agree to your proposals the arrangement will become legally binding on them. All you then have to do is make the agreed payments. Once you have fulfilled the terms of your arrangement you will be free from your debts, even if you have only repaid a fraction of what is owed. |
| During the arrangement we will conduct regular reviews of your monthly payment. If during the period of your arrangement you find that you cannot meet the agreed payments we can ask your creditors if they will agree to vary the terms of your proposals. We want your arrangement to succeed and will do everything we can to help you through it. |
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| Advice for Residents of Scotland |
| We are able to offer advice on debt management plans, administration orders, bankruptcy or if you live in Scotland, sequestration, trust deeds, as well as general advice on how to deal with your creditors and prioritising your debts. |
| A Trust Deed is a formal legally binding agreement between an individual who is unable to pay his/her creditors and a licensed Insolvency Practitioner (the Trustee). The Trustee will put together a form of proposals to the Creditors for approval and administer the Trust Deed A Trust Deed is a form of informal bankruptcy but still regulated by The Bankruptcy (Scotland) Act 1985. |
| Provided certain conditions are met, the Trust Deed may be registered as "protected", this prevents creditors from taking further steps eg sequestration (bankruptcy) to recover debts due to them |
| The advantages of a trust deed are that it can take the pressure off as all correspondence and queries from creditors are dealt with by the Trustee. It puts the debtor rather than creditors in control of the debtor’s financial situation. A Trust Deed is usually more flexible and costs less to administer than sequestration. It also allows the debtor the right to hold certain public offices - which would not be the case with sequestration. It may be possible for companies to continue trading and individuals to retain their directorships. |
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