Over a set time, normally 60 months, you make contributions to an Insolvency Practitioner (the Supervisor of the IVA) who then makes creditor repayments in accordance with the laws of The Insolvency Act 1986.
An IVA protects you from creditors who are owed sums at the date of the IVA and makes your debt more manageable.
The amount you pay back depends on your individual situation.
The amount you owe, expenditure, living arrangements and your income all need to be taken into account.
For an IVA to be initiated, over 75% of creditors must approve it.
In order for an IVA to be a viable option, you should:-
How does an Individual Voluntary Arrangement take place?
Your insolvency practitioner will write up an IVA proposal stating your plan of action.
You and the Insolvency Practitioner choose what level of contribution you should make and over what period.
Following this, your proposal will be sent to your creditors and they will vote to approve or reject it.
If it is approved of by over 75% of creditors (via debt value), then the IVA is in place.
IVA fees are set up by creditors and therefore it is important you have the right insolvency practitioner processing it.
If you are a homeowner who has equity in your property, you might have to pay part of your share of this equity inot the IVA (often in the last year of the IVA).
The amount that needs to be repaid may increase if your IVA lasts for an extended period of time.
If you cannot keep up your repayments and your IVA fails, it is possible you will be made bankrupt.
Your credit rating could be affected after the start of your IVA.
If you’re looking to avoid bankruptcy proceedings and deal with your debts in a managed way and IVA might be the best option.
An IVA is also a good option if you’re looking to halt legal proceedings against you.
Hudson Weir are an established firm of Insolvency Practitioners who specialise in business recovery and corporate financial solutions. Hudson Weir provides industry leading, nationwide services for its clients with the intention of easing financial pressures and providing recovery strategies for struggling businesses.More about us