Individual Voluntary Agreement is a solution for your debt problems. An IVA helps you to eradicate some of your debts through a lawfully binding agreement with the lenders. IVA is a kind of insolvency but different from bankruptcy. If the court approves an IVA, your creditors are legally bound to stick with the decision.
If you are unable to pay your debts, then IVA may be a solution for your debt problems. It will help you a lot but you must know how to apply for an IVA. Let’s discuss the process in detail:
Get Expert Advice
Getting an expert advice is very important because they will analyze whether you need an IVA or not. They will help you navigate the benefits and drawbacks should you apply for an IVA. More so, not everyone can opt for an IVA because one may face more risks than benefits of getting an IVA.
The experts that read your case are called insolvency practitioners. If your insolvency practitioner decides to apply for an IVA, then he will prepare your case.
Applying for an Interim Order
Your insolvency practitioner will request to the court to issue an interim order. This interim order will keep your creditors at bay from getting back the loan till the approval of an IVA. Hence, creditors will not be able to take any legal action against you and they will not be able to make you bankrupt.
Evaluating Finances and Payments
Your insolvency practitioner will evaluate your income and assets. He will look what you can save at the end of the month after meeting all your expenses. The insolvency practitioner will look deep into your assets.
He will assess which of your assets should be included in an IVA to raise the money for repayment to the creditors. He will take care of your mandatory assets that you need for the survival. For instance, he may not include your home because you do not have any other property to live in.
Your insolvency practitioner will try to offer as much to the creditors you can afford. Remember, a realistic IVA has more chances of success than an unrealistic IVA.
Write a Proposal
Your IP will prepare a proposal for your creditors. The proposal will decide how you will pay back your creditors. Whether you pay in full or in an installment basis. It will also decide how much debt you are trying to write off from your total debt.
The IP will make a report for the court. The court will also assess whether the proposal is acceptable or not. However, your IP should consider interests of your creditors while making a proposal. Your creditors may reject the proposal at once if they see their greater loss.
A creditors meeting will be held and they will vote whether to accept or reject the proposal. Usually, this meeting is held in the IP’s office. You must attend the meeting because you can show your position in person to the creditors.
If 75% or more creditors make a vote to accept your proposal; hurrah, your IVA is approved. Now, the creditors who voted against the IVA are also bound legally to accept the decision.