How does an IVA work?

Once you have made the decision with our advice that an Individual Voluntary Arrangement is the right route for you, and the monthly affordable contribution is sorted out with the above review process, an IVA Proposal will be drawn up by the Insolvency Practitioner (IP) which you will need to read and fully understand.

Assuming you are happy with the contents and terms of the Proposal, this must be signed and returned to the IP.

This Proposal will then be circulated to all of your unsecured creditors for their consideration, and they will be advised of a date when the Meeting of Creditors will be held at which time they will be required to signify their agreement to the proposal or otherwise.

Depending upon the urgency of the IVA, where a creditor is exerting extreme pressure for unrealistic payments or threatening legal action such as bankruptcy etc, it may be necessary to obtain an Interim Order from the Courts as part of the process, which would prevent creditors from taking further legal action pending the outcome of the Meeting of Creditors.

For an IVA to be successful (approved), creditors will be requested to vote either for or against the Proposal at the Meeting of Creditors. The key point in this is that only those that vote will hold any sway in determining success or otherwise, and therefore if only one creditor votes, in favour of the IVA, the IVA will be approved. However, if only one creditor votes and is against the IVA, but represents less than 25% of the total debts, the Meeting of Creditors will be suspended for a later date whilst the IP presses those creditors who did not vote at the outset to take part in the process.

An IVA will only be approved if positive votes are obtained by creditors representing 75% of the total monetary debt represented by the votes. If any of the creditors choose not to vote, it will be assumed that they would vote in favour of the IVA Proposal.

The IVA is legally binding on all parties involved. Therefore as long as you keep to your part of the Agreement, keeping up with payments etc, you will be free from these debts regardless of how much has been paid off, when the IVA term is finished.

Throughout the term of the IVA, your IP will carry our regular reviews of your financial situation to see if there have been any material changes to your situation, and to ensure that you can continue to afford the arrangements.