Learn about the entire IVA process and how it works to find out if it is the right option for you.

It can be difficult to decide what the best repayment option is when you are in debt. Even though there are several options available, what you end up choosing will depend on how much you owe, and the assets you have. One of the best options for people that are struggling to make repayments and are at serious risk of defaulting on their debts is an Individual Voluntary Arrangement or IVA. It is a legally binding contract with your creditors and ensures that you can make regular installments to repay your debts.

To help you gain a better understanding of the Individual Voluntary Arrangement, we are going to be discussing the entire IVA process and how it works.

Understanding the IVA Process

You can break down the IVA process into six different stages. It will take around 6 weeks for the entire process to complete, but it also depends on the speed with which you are sending the required evidence to your advisors. Here is how the IVA process works:

Stage 1

The first stage involves speaking with an impartial advisor to find out whether an IVA is the best solution for you under your current financial condition. The advisor is going to look at your debts, assets, expenditure, and income thoroughly to calculate what you can afford to pay to your creditors every month. They will determine if the creditors will agree to the IVA. At this stage, the advisor should explain all the options available to you, including bankruptcy.

Stage 2

Once it has been determined that an IVA is the best solution for you, then taking the information you have offered a Statement of Affairs will be drafted. The Statement of Affairs will provide a complete picture of your financial circumstances and is the most important aspect of your IVA proposal.

There will also be details related to your creditor, along with an analysis of your expenditure and income, and additional supporting evidence that is required from you. Your Nominee will then apply for a legal injunction, known as an Interim Order that will stop your creditors from acting against you until your IVA proposal is accepted.

Stage 3

Once you’re satisfied with the proposal, it will be sent to your creditors and the Insolvency Service and local county court. Your proposal document will have details related to the date of your IVA application when it is going to be considered by all the creditors. This meeting is also called the Meeting of Creditors and if you wish to make any changes to the proposal, you can make a request at the meeting. This meeting could be delayed by the creditors if they decide that they need more information from you or require more time to go over the proposal.

Stage 4

When the meeting takes place, all the creditors will take votes on if they wish to accept or reject the proposal. You need to get 75% of the votes in your favor to get the proposal approved. If you get the required number of votes, then all the unsecured creditors will be legally obligated to follow the terms set in the IVA agreement irrespective of how they voted.

Stage 5

After the proposal has been approved, all the involved parties will be informed. A Supervisor will be appointed, who will be monitoring all monthly payments and ensure that you are following the terms of the IVA.