What Is An IVA ?
The Individual Voluntary Arrangement (IVA)is the main formal alternative to an individual that wishes to avoid petitioning for their own bankruptcy.
The measure was introduced by the Conservative Government as part of the Insolvency Act of 1986. It enables a debtor to make a formal proposal to the organisations that they owe money to in order to reach a mutually acceptable settlement. If the proposal is approved by a majority of the creditors, the IVA then stands as a contract that binds all parties and prevents any further action.
A typical IVA will offer to pay whatever is affordable monthly into a fund over a five year period, and after that the debt is cleared. This can be the case even if the creditors end up getting less than 25% of their debts repaid, and so monthly payments into an IVA can be as little as £250 per month.
Payments are based on what an individual or household can actually afford and are normally between £250-1000 per month.
The IVA Process
The IVA was designed initially to be a more simple way of personal insolvency situations without incurring the excessive costs and court time involved in an individual petitioning for their own bankruptcy.
The IVA process takes around 4-6 weeks from the point of application, including activities such as fact finding, collection of evidence, drafting the IVA proposal, reviewing and signing, sending to creditors, and voting.
The resulting IVA proposal will be based on what the debtor can realistically and sustainably afford to pay over a five year period. Normally it will be made up of 60 monthly payments at an agreed level, however it can also include lump sum contributions from, for example, a release of equity from a property.
The approval of an IVA is dependent on receiving a 75% majority of approving votes from the creditors. Most lenders have standard terms for what they will accept, including normally a reduction in the overall level of debt by as much as 75%. Most good insolvency practices are quite familiar with these terms.
Once approved a standard IVA will run for a five year (60 month) period. During this period payments are made on a monthly basis into a fund that the Insolvency Practitioner governs. The funds that accumulate in this account are used to pay off the creditors. This fund is also used to pay the fees of the Insolvency Practitioner.
The payments into the fund are supervised by the Insolvency Practitioner. There are normally payslip reviews approximately every quarter, and a full review of the debtors situation every twelve months.
During the period of an approved IVA the creditors are required to freeze all interest on the debts, and they are prevented from pursuing the debts and prevented from porgressing any legal action related to these debts.
At the end of the five year period, assuming that the IVA has been satisfactorily completed, all of the debts are cleared.
Myvesta UK IVA Advice
The measure was introduced by the Conservative Government as part of the Insolvency Act of 1986. It enables a debtor to make a formal proposal to the organisations that they owe money to in order to reach a mutually acceptable settlement. If the proposal is approved by a majority of the creditors, the IVA then stands as a contract that binds all parties and prevents any further action.
A typical IVA will offer to pay whatever is affordable monthly into a fund over a five year period, and after that the debt is cleared. This can be the case even if the creditors end up getting less than 25% of their debts repaid, and so monthly payments into an IVA can be as little as £250 per month.
Payments are based on what an individual or household can actually afford and are normally between £250-1000 per month.
The IVA Process
The IVA was designed initially to be a more simple way of personal insolvency situations without incurring the excessive costs and court time involved in an individual petitioning for their own bankruptcy.
The IVA process takes around 4-6 weeks from the point of application, including activities such as fact finding, collection of evidence, drafting the IVA proposal, reviewing and signing, sending to creditors, and voting.
The resulting IVA proposal will be based on what the debtor can realistically and sustainably afford to pay over a five year period. Normally it will be made up of 60 monthly payments at an agreed level, however it can also include lump sum contributions from, for example, a release of equity from a property.
The approval of an IVA is dependent on receiving a 75% majority of approving votes from the creditors. Most lenders have standard terms for what they will accept, including normally a reduction in the overall level of debt by as much as 75%. Most good insolvency practices are quite familiar with these terms.
Once approved a standard IVA will run for a five year (60 month) period. During this period payments are made on a monthly basis into a fund that the Insolvency Practitioner governs. The funds that accumulate in this account are used to pay off the creditors. This fund is also used to pay the fees of the Insolvency Practitioner.
The payments into the fund are supervised by the Insolvency Practitioner. There are normally payslip reviews approximately every quarter, and a full review of the debtors situation every twelve months.
During the period of an approved IVA the creditors are required to freeze all interest on the debts, and they are prevented from pursuing the debts and prevented from porgressing any legal action related to these debts.
At the end of the five year period, assuming that the IVA has been satisfactorily completed, all of the debts are cleared.
Myvesta UK IVA Advice
posted by Your Friends @ Myvesta.org.uk at
1/21/2006 11:45:00 pm
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