Interested in an Individual Voluntary Arrangement

If you’ve got money troubles and believe that you could be insolvent, you should find out more about an Individual Voluntary Arrangement (IVA) and ways in which an IVA might make life much better. Bear in mind that undergoing money anxieties in itself isn’t sufficient to be eligible for an IVA. It is essential to actually be insolvent. That means that you have to be unable to pay the money you owe once they fall due and that if you were to put up for sale any resources you might have, such as a home, would most likely realise insufficient money to pay off your due debts, despite the help of your earnings.
Therefore let’s imagine that you have debts and can’t afford to make the agreed monthly payments to your lenders. However, you do hope to attain agreement with all of them to settle what you are able manage. Provided you’ve got a steady salary, an IVA may very well help you to arrive at agreement with creditors to settle some of your financial obligations and then to have the balance written off inside a decent length of time. An IVA is a formal and binding deal to pay back some of your debt during a limited time period – frequently five years, however it may perhaps be for a shorter time. It is binding upon all parties – both you and your lenders. At the conclusion of the agreed life of the IVA, assuming you have followed the stipulations of the IVA agreement, all your debts are discharged. These are some of the commonly asked questions.

Must I include all my debts within my IVA offer? With the exception of secured debts such as your home loan or your car HP, all unsecured debts will have to be incorporated in your offer for an IVA.

What are unsecured debts? Credit cards, loans, current accounts, store cards, borrowings from friends or family, arrears on utility bills such as phone, gas or electricity, self assessment tax arrears and defaults on local authority or council tax or water charges are all instances of unsecured debts.

Must all my lenders be in agreement to accept my IVA proposal? No. Every one of your unsecured creditors enjoy the legal right to vote on your proposal however in practice only some creditors exercise this power. Of the unsecured creditors who do exercise their right to vote, not less than 75%, as measured by the amount of your personal debt to them, must accept your proposal for an Individual voluntary arrangement to be deemed to be accepted. Furthermore, the lenders who do not vote are nevertheless bound by the decision taken by the creditors who did vote.

What about the IVA being binding? All accepted IVAs are listed with the government. The primary laws overseeing the creation and control of IVAs is governed by the Insolvency Act (1986) in conjunction with some additional recent legislation.

How much money must I pay into my IVA fund? No more than what you can afford. An income and expenditure declaration is put together and your monthly installment will in most cases be the difference between your income (what you earn plus any pensions, benefits or other unearned income that you get) and your expenditure (your living expenses, which includes home loan and vehicle HP payments and also the living costs of your dependents such as your family members).

For how long will I have to make these monthly payments? The standard timeframe for an IVA is five years or sixty months. However, it could be shorter than that if further money should become available. For instance, if you should re-mortgage your property, with the prior authorization of your unsecured lenders, consequently releasing an equity lump sum, and chip in some or all of this cash to your IVA, lenders could possibly consent to limit the time period of the IVA, helping you to be debt-free in a shorter time frame.

What about my home loan or motor vehicle HP payments? You will continue to pay these directly to your secured creditors and they are allowed expense items on your income and expenditure affirmation.

How about the expenses I will incur in an IVA? The supervision charges of the IVA are taken from the monthly installments you make into your IVA. Creditors receive the balance of the monthly payments you make. You need to pay nothing more yourself.

Will I get an estimate of these administration fees? Not only a quotation. Your IVA provider must incorporate a clear summary of the expenses of the IVA in the IVA proposal itself and these will normally be unchanging throughout the time period of the IVA or if not permanently fixed they’re very easily computed. So, you’ll be aware at the start precisely what the fees of the course of action shall be over the entire life of the IVA.

Where can I get guidance on an IVA and what will that cost me? There are many good companies offering insolvency services on a business basis and an integral part of that program is to give free preliminary advice. Additionally, there are a number of charitable enterprises such as CCCS that are financed by creditors. Whenever an IVA is accepted by lenders, it is supervised and administered by a licensed Insolvency Practitioner (IP). This is a requirement of the law. The IP charges no fees and earns no revenue before the IVA is approved by lenders. The IP’s charges subsequently come out of the payments predetermined with the lenders. In the event the creditors don’t consent to the IVA proposal, the IP draws no fees at all and you, the debtor, have absolutely nothing to pay.

What other options do I have? The leading different remedies normally contemplated by people who have personal financial problems are to obtain a consolidation loan or to be accepted into a debt management plan or to go bankrupt. It may even be viable to control your financial issues somewhat differently and you may find that you are not really insolvent after all. In such a situation you might be in a position to handle your own money issues yourself. Your IP ought to describe all the choices to you and indicate what are the most beneficial both for you personally the borrower and for your creditors.

How can I get advice on all of my choices? A good initial step will be to call a number of good insolvency firms (simply to verify that you are getting the best advice and also that that advice is consistent). Then again you could possibly call one of the charitable free advice organizations for example the CCCS or a nearby CAB office. You shouldn’t have to pay anything to get advice on your choices. You will have to supply full details regarding your financial position and following your consultation you will have a much clearer idea of how to proceed next. You might need several meetings to get to that point. When you’re satisfied that you know and comprehend your choices, you are still free to walk away, with the benefit of the guidance. You do not have to commit to anything.