Before entering into an Individual Voluntary Arrangement (IVA), ensure that you get impartial debt advice from a professional debt expert. Your Insolvency Practitioner (IP) will also advise you accordingly if you choose to get an IVA to write off your multiple unsecured debts. Hence, follow along if you want to know how to set up IVA and how long it will take.
There are a few steps that you should follow to set up IVA. If your IVA setup is successful, you no longer have to deal with your creditors and can become debt-free after the IVA term ends. Your Insolvency Practitioner will meet with the creditors and handle your financial affairs. You just have to ensure that all the information provided is accurate and complete.
Your very first consideration to enter into an IVA is how to set up IVA. The Insolvency Practitioner will set up IVA for you as you cannot set up IVA by yourself. Only the designated and professional personnel can set up IVA.
For a complete IVA setup, the standard time is about four to six weeks at most. During this duration, various IVA setup procedures are accomplished to get the court’s approval for the IVA proposal. The following guidelines are undertaken for IVA setup.
Step 1 of IVA setup: To obtain an interim order from the court.
After you apply for an Individual Voluntary Arrangement (IVA) and is assigned an Insolvency Practitioner (IP), the initial step for IVA setup is to apply for an interim order in the court. You cannot apply for an interim order by yourself; the IP will do that for you. In an IVA setup, the temporary order restricts the creditors legally from taking any unwanted action to recover your debts. For instance, the creditors cannot file for your bankruptcy in court to get their debt money back.
Although an interim order appears significant from a debtor’s point of view, the decision to get one is entirely dependent on the IP. If your IP decides otherwise or that you are not eligible, the court might just cancel your interim order application.
Step 2 of IVA setup: To examine the debtor’s finances.
Once the IVA setup is in process, you have to prepare all your financial documents as and when necessary. Including your property and other assets and economic history are some key elements essential to assess your existing financial situation. You must ensure that they are adequate and complete. Any discrepancies in your financial information will lead the IP to work out the wrong outcome. If you are confused about what information to provide and which debts to include in your IVA, you can seek advice from your IP.
Since you cannot set up IVA yourself, the IP will examine the comprehensive list of your finances. Such a list consists of your credit history, bank statements, income, living expenses, third-party incomes, debts, etc. The IP will then assess the provided data to identify the most feasible monthly IVA repayment amount for you. The speculated IVA repayment amount is such that you will have enough funds left to cover your daily living expenses and other priority debts if any.
If the IVA repayment plan is affordable to you, the IP will meet the creditors and get the agreement for the IVA repayment plan. While reporting your IVA repayment plan to the creditors, the IP must confidently convince the creditors that the IVA is reasonably practical for you to afford.
Step 3 of IVA setup: Drafting an IVA proposal.
IVA setup is the task of the IP. Whether to present your IVA proposal to the creditors or at the court, all your IVA procedures and financial affairs are for the IP to take care of until the IVA term lasts. Before meeting the creditors, the IP will draft a reasonable and practical IVA proposal on your behalf. The top part of the IVA proposal is that you agree to its terms to make regular IVA repayments to the creditors within your capacity until the IVA duration. The general duration for an IVA is typically around four to six years. And, the creditors should agree to write off any remaining debts, if any, of your after the IVA is over.
The IVA proposal usually consists of :
- Your entire financial history includes income details, ordinary expenses, assets & properties owned, if any, and information on your debts & creditors.
- The terms and conditions of the proposed IVA agreement, such as how long is the IVA duration and how much debt will be repaid within the IVA term.
- A report whereby the IP will reason the validity of your IVA proposal and why getting into this IVA agreement is worthier than filing for bankruptcy.
All matters that will proceed after the IVA proposal is approved will be determined during the setup. Once the IVA comes to force, alterations will need solid proof and reasonings, although available.
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That’s why during the IVA setup, the IP is responsible for drafting a good IVA proposal that fits the debtors’ circumstances and the creditors’ likelihood of agreement. The IVA repayment plan should be such that it is within the debtor’s ability. Suppose either the debtor or the creditor demands to include such a term in the IVA proposal against the existing assessment. In that case, the IP can announce your IVA proposal as rejected.
Step 4 of IVA setup: Creditors’ meeting with the IP concerning the IVA proposal.
As the IVA proposal is drafted, the IP now meets the creditors and gets their green signal for the IVA proposal. The IVA proposal will deem as accepted if the majority of the creditors (exceeding 75% out of all) vote in favor of the repayment plan. Or else it will be deemed as rejected.
The IVA setup will be completed when the creditors agree to the IVA proposal, and the IP presents the same in the court. Approval from the court will commence the effect of the IVA proposal till the end of its term. Now, the IVA setup is complete. The debtor and the multiple creditors are now legally bound under the IVA agreement.
The code of practice, or the IVA protocol, ensures that the IVA is progressed fairly.