IVA from Debt Advisory Service POSITIVE SOLUTIONS FOR INDIVIDUALS & BUSINESSES
INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA) An Individual Voluntary Arrangement (IVA) is a flexible procedure where a debtor makes an offer to his/her creditors which can result in the debtor being debt free in 60 months.
THE PROCEDURE
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A proposal is drafted by the debtor with the assistance of a debt counsellor, setting out the debtor’s circumstances, assets and liabilities, and the manner in which he/she proposes to deal with creditors.
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When the proposal is complete an application for an interim order is made by lodging the documents with the Court having jurisdiction in respect of the debtor. This will result in the issuing of an Interim Order which prohibits the commencement or continuation of any legal process against the debtor or his estate until the Nominee considers the proposal to be both realistic and workable.
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The Nominee (a Licensed Insolvency Practitioner) will file a report into the Court which indicates if in his opinion a creditors meeting should be called. The Nominee then circulates all the debtors creditors with the proposal.
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At the creditors meeting, a vote is held to decide on whether or not to accept the proposal. Seventy-five percent (75%) in value of the creditors who are present or represented must vote for the proposal for it to be accepted.
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The Supervisor appointed at the creditors meeting then proceeds to administrate the proposal.
ADVANTAGES OF AN IVA
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Up to 70% of your debt could be ‘written off’ as part of the arrangement.
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No more interest or charges will be added.
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You will make a single monthly payment for a period of 5 years based on what you can realistically afford.
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The IVA is legally binding so that your creditors cannot change their minds once they have agreed.
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Once agreed, your creditors cannot bring any action against you as long as you comply with the IVA.
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Your creditors will no longer be able to chase you for payment, so the letters and phone calls will stop.
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You are able to have a bank account as long as it does not have an overdraft facility.
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There will be no publicity in your local newspaper as there is with bankruptcy.
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Your home will not be at risk, and you will usually be able to keep your car.
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An Individual Voluntary Arrangement does not affect your ability to hold public office.
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An IVA does not affect your professional status and your employment will not be affected, even as a company director, accountant, and police officer or in the armed forces.
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An IVA enables a sole trader or partner to continue to trade and generate income towards repayment to creditors which would otherwise have a call upon the personal assets of the individual.
DISADVANTAGES OF AN IVA
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An IVA is only suitable if your total unsecured debt is more than £15,000.
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Although you won’t have to sell your home, you might be required to remortgage it at the end of the IVA to release some of the equity, but this will depend on your particular circumstances.
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If the IVA fails as a consequence of the debtor not meeting his obligations under it, it is likely that the debtor will be made bankrupt at this time.
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Entering into an IVA can affect your credit rating for up to 6 years, not only for the period of the IVA, however, if the IVA is successfully concluded, that fact will be recorded on your credit file and may be looked upon favourably by a future lender.
IVA ALTERNATIVES
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One alternative to the IVA is to enter into an informal arrangement / debt management scheme with your creditors.
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It is not legally binding in the same way and not administered through the Court.
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You enter into an agreement with your creditors, with the help of a debt counsellor, by negotiating with them you reach an agreed figure and payment plan to settle the debt.
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If you reach an agreement you will not have the same legal assurances as with an IVA.
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You might not necessarily enjoy the same advantages such as interest being frozen and legal proceedings being halted.
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If it has been established that an IVA or a debt management scheme is not a suitable option you may have no alternative but to arrange for a petition to be presented to the Court for your bankruptcy.
To find out whether an IVA is a suitable option for you cal FREEPHONE 0800 0191 278
or complete our Enquiry Form.
Registered in Scotland Company No. SC244337 Consumer Credit Licence 568772 Head Office: Suite 201-203, Baltic Chambers, 50 Wellington Street, Glasgow G2 6HJ | Tel: 0800 0191 278 | Fax: 0845 130 2935
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