Individual Voluntary Arrangements

A Debt Management Programme is less informal and is not the same as an IVA. An IVA can help you pay off your debts in a way that you can afford. An IVA results in one monthly payment paid over a period of sixty months. You are involved, you will be required to make known all of your assets, your income and your cost of living. The information you give will make sure that you do not accumulate any more debt because the amount that you pay is determined by the amount that is affordable to you, after having paid out your normal cost of living.

A licensed Insolvency Practitioner is the person who prepares an IVA proposal. As you are the debtor you will be sent a copy for your approval. If you disagree with anything in this proposal then you can negotiate for alterations. Once you agree to the proposal, it is then presented to the creditors by the Insolvency Practitioner. You the debtor must take it to the local county court and have it registered.

Each creditor will then be sent a copy of the proposal which gives them notice of any creditors meetings that may be held. Creditors can vote to accept or reject the proposal and can if they wish to, add modifications of their own but only with the debtors consent. IVA creditors normally prefer to vote by fax or post when dealing with the case of a consumer. The debtor is asked that on the day of the vote to ensure that they can be contacted by phone. The IVA documents states that providing that 75% (term values) of those who voted, voted to accept proposals the IVA is legally binding on all parties whether they voted or not.

Once an IVA is accepted the IVA’s progress is monitored by the Insolvency Practitioner who makes sure that terms and conditions are properly met. The debtor’s responsibility is to pay the agreed amount to the Insolvency Practitioner who then distributes the payments to the creditors. A debtor must keep up payments, if not it will result in the failure of the IVA. If at anytime the debtor finds that they are having difficulties making payments they should contact the Insolvency Practitioner who may be able to negotiate with the creditors.

When the IVA has been completed the debtor would be considered debt free and they should be able to make a fresh start. In some special cases the debtor may not have paid off or been able to pay off all of their debts but the balances that are outstanding may be written off. In such a case the debtor will still be considered debt free.

If you have an endowment which is linked to your mortgage then if you are in debt you may be required to use it to pay off your creditors. It will be the same with any equity that you have in your home it will be used to pay of any of your debts.