Individual Voluntary

Individual Voluntary Arrangements (IVAs) are an official alternative for those people who want to avoid bankruptcy. It is a legal agreement between the debtor and the creditors and it helps to overcome financial difficulties.

An IVA is also considered to be a substitution to bankruptcy and its use has increased in recent years.

Here are some advantages of the Individual Voluntary Arrangement:

  1. you can save some costs of the bankruptcy;
  2. creditors usually get more;
  3. debtors avoid the stigma and limits of the bankruptcy.

Let’s find out how this system works.

It is well known that debts are settled for a fixed period of time (usually 5 years). When you finally make a decision that Individual Voluntary Arrangement (IVA) is something that you really need, the creditors will ask you some questions about your current financial situation. After you give all necessary information, a repayment amount, based on the information about your credit history, will be agreed with you. Then the number of proposals will be represented to you. After this you will have to check and sign some documents. Then you will return it to your IP (that is Insolvency Practitioner).

An application will be brought to the court for an Interim Order. After that, the creditors will not be able to take any actions against you (legal or any other one). The only thing that you will have to do will be – to attend your creditors meeting, but that will not happen very often (usually it never happens). Usually your creditors will keep in touch with you by the phone.

In some cases of Voluntary Arrangement (IVA) the creditors will be asked to vote for or against the arrangement. In the case when the creditor makes his choice "for" the arrangement, the Individual Voluntary Arrangement (IVA), the Individual Voluntary Arrangement (IVA) will be permitted. But when the creditor says “no” to the Individual Voluntary Arrangement (IVA) and they represent less than 25% of the whole debt, this meeting will be suspended for some other date and this time, the other creditors who did not vote will be called to make a decision. In the case when the creditor who was against the Individual Voluntary Arrangement (IVA) represents more than 25% of your whole debt the Individual Voluntary Arrangement (IVA) will definitely fail. It is well-known that an Individual Voluntary Arrangement (IVA) will be approved only if 75% in monetary value is voted for. In the case when some creditors do not vote at all, they will have to vote “for” the Individual Voluntary Arrangement (IVA). Then an Individual Voluntary Arrangement (IVA) will be officially binding. You keep up your repayments and when the period of your agreement is over, you will be free from these debts no matter how much u have paid off. In the case when the creditor who was against the Individual Voluntary Arrangement (IVA) represents more than 25% of your whole debt the Individual Voluntary Arrangement (IVA) will definitely fail. It is well-known that an Individual Voluntary Arrangement (IVA) will be approved only if 75% in monetary value is voted for. In the case when some creditors do not vote at all, they will have to vote “for” the Individual Voluntary Arrangement (IVA). Then an Individual Voluntary Arrangement (IVA) will be officially binding. You keep up your repayments and when the period of your agreement is over, you will be free from these debts no matter how much you have paid off.

During the time of your arrangement the creditors will review very often your financial situation in order to find out any change in your state of affairs. The majority of cases of an Individual Voluntary Arrangement (IVA) are based on a reasonable monthly payment (over a period of 60 months). This one reasonable payment is based on your salary minus your expenses. The Licensed Insolvency Practitioner (IP) prepares an Individual Voluntary Arrangement (IVA) proposal. After that, the IP will present this proposal to the creditors at the creditors meeting. But it is quite unusual for them to be present at the meeting because most of them prefer to vote by fax or simply by post.

After the acceptation of an Individual Voluntary Arrangement (IVA), the IP (Insolvency Practitioner) becomes the supervisor of the Individual Voluntary Arrangement’s (IVA) development.

The debtor has its responsibility that is to do all the payments to the IP (Insolvency Practitioner). After that the IP will guarantee that these payments are distributed to all creditors according to the term. All debtors are trying to pay their debts off; otherwise, if they do not do that in time, it will result in the failure of the Individual Voluntary Arrangement (IVA). The debtor becomes free from his debts after the end of the Individual Voluntary Arrangement (IVA) even if he has not really paid off all his debts. The outstanding balances of the debtor are written off and the debtor has an opportunity to have a new financial start.


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