IVA is a legally binding arrangement between the debtor and the creditors in which the debtor agrees to pay a certain amount in a monthly basis into the IVA in order to clear off his debts. The amount that is paid to the IVA is calculated after analyzing the income and expenditure of the debtor. However, the debtor has to fulfill certain strict criteria to apply for an Individual Voluntary Arrangement:
In order to qualify for an IVA, the debtor must have a minimum amount of debt and the number of creditors.
The debtor or the partner must have a regular source of income originating from regular employment.
If the debtor is a homeowner, his mortgage payments will be taken into consideration as expenditure costs.
If the debtor’s personal financial situation changes during the IVA, the Insolvency Practitioner will act on the debtor’s behalf and submit a revised offer to the creditors.
The Individual Voluntary Arrangement will come into effect after the creditors have accepted the proposal submitted by the Insolvency Practitioner on behalf of the debtor. This proposal is approved during the creditors meeting when it is submitted to the creditors’ vote. If more than 75% of the creditors in value vote (in person or by proxy) in favor of the proposal, the IVA is considered to be approved. However, if any of those voting are associates (business associates, friends or family), a second count takes place during which 50% of non-associated creditors must vote in favor of the IVA proposal for it to be approved.
During the IVA period, if the personal and financial situation of the debtor changes, a new proposal has to be submitted by the Insolvency Practitioner. The creditors will review the proposal and vote for approval. Once the IVA is accepted by the creditors, all charges and interest rates will be frozen.
If for some reasons, the debtor defaults in his monthly repayments, it is more than likely that the debtor will be considering a bankruptcy if no new terms can be found in order to carry on with the IVA. An IVA and Bankruptcy are not mutually exclusive. A person who has already gone through bankruptcy can still propose for Individual Voluntary Agreement. If the arrangement is agreed post-bankruptcy, then the debtor can apply for annulment of the Bankruptcy Order from the court. It then becomes possible to nominate an Official Receiver to supervise the arrangement. This type of arrangement is called a Fast Track Voluntary Arrangement and is only suitable in certain cases.
There are many other articles also in the internet for IVA advice, if you want to know more about IVA to though them.
