Obtaining an IVA is a complex process and requires a close examination of your entire financial situation. An IVA is usually understood as a way of avoiding bankruptcy but similar to bankruptcy, it has its pros and cons and must be considered side by side. More generally, an IVA is a legally binding agreement between you and your creditor to pay your debts over some time. The court approves it, and your creditors have to follow it. However, it must not be understood as an easy way to avoid bankruptcy and minimise payments to creditors. They must be arranged by a qualified insolvency practitioner who will handle your creditors throughout the entire life of the IVA.
Your insolvency practitioner will create a repayment plan consisting of monthly payments, a lump sum or a combination of both. A typical repayment timescale is five years. You pay the insolvency practitioner the agreed sum, and they then distribute this to your creditors. The creditors write off any outstanding sums at the end of the period (provided no payments are missed). You will be expected to live on a budget approved by your creditors for the duration of the IVA. Changes in circumstances, such as a new job or pay increases, must be reported. In addition, the IVA will be included in your credit history, which could affect future borrowings.
Typically obtaining an IVA takes four stages.
♦ Applying to the court for an interim order (stops creditors chasing you).
♦ Financial examination.
♦ Drawing of a proposal, here the practitioner will argue that an IVA is a more suitable option than bankruptcy with your creditors.
♦ Creditors vote; if the majority agree then, the IVA is awarded.
Assets
Assets that you own outright, such as a car, antiques will be repossessed to help pay your creditors (unless they have minimal value or you have a valid reason not to sell them), your insolvency practitioner will go through these with you.
Windfalls
You must inform your insolvency practitioner if you come into any money during the IVA period. Typically, the first £500’s goes ignored; the rest goes to your creditors.
Beware – There are firms on the internet which offer such terms as “write off 80% of your bills” and so on, we would suggest taking such claims with extreme suspicion and steer clear of such companies as they would charge for simply referring you to a practitioner when you can simply find one yourself with extreme ease at https://www.insolvencydirect.bis.gov.uk/fip1/
Alternatively, you may consider using an insolvency practitioner. You can find them at:- www.insolvencydirect.bis.gov.uk
How we can help
Leston’s cannot provide specific debt advice as we are not registered financial advisors, however we are more than happy to direct you to one of our approved and impartial financial advisors who can examine your finances in great detail. to gain our assistance simply click on the “Create a case” link at the top of this page to initiate a case. Remember all debt solutions are temporary – there is always light at the end of the tunnel.
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