When an IVA is completed what happens?
What is an Individual
Voluntary Arrangement (IVA)?
An IVA is a formal agreement set up by a licensed Insolvency Practitioner between you and your unsecured creditors. (individuals or companies you owe money to) to repay your debts over a period of time. This allows all or a percentage of your debts to be repaid over a maximum period of five years. Any debts still remaining after the five year period would be written off.
You would make an affordable monthly payment into an IVA fund which would then be divided between your creditors on a periodic basis over the term of your IVA.
The agreement usually lasts between two and five years but does vary depending upon personal circumstances.
An IVA is a legally binding agreement between you and your unsecured creditors and was introduced by the Government as part of the Insolvency Act 1986 as an alternative to bankruptcy. This agreement ensures that once the scheme has run its course all the debts included in the arrangement would be legally fulfilled and any remaining debt would be written off.
Who can enter
into an IVA?
Anyone in England and Wales with debts over £15,000.
How much does
an IVA cost?
An IVA is set up to repay your unsecured creditors. This usually results in you agreeing to repay an affordable amount each month into a scheme fund held by the Supervisor of the Arrangement. The level of the repayment is set by examining your income and expenditure and deciding what free income is available to pay into the scheme.
You must remember that with an IVA in place you would only have to pay your agreed monthly contribution. There would be no additional payments to your existing unsecured creditors as they would be included in the Arrangement.
The total sum paid to your existing unsecured creditors would come from the scheme fund. Once the final payment has been made the full debt would be cleared from your records and you would receive a certificate stating that you have been discharged from the IVA scheme.
Wilson Field's fees would be paid from the agreed monthly contributions. The unsecured creditors would be aware of this when they agree to the IVA. No fees would be directly payable to us by you. We usually receive our fees from your scheme fund.
How long does
an IVA last?
An IVA can last from six months to five years dependant upon personal circumstances.
How do I set up
an IVA ?
This is quite simple. We have a standard questionnaire and one of our trained insolvency advisors can help you to complete this. We also prepare a number of authorisation letters for you to sign.
On their completion, the proposal setting out your intentions would be prepared. Once you have agreed to its content we would send it to your unsecured creditors for their consideration. They would then vote on this.
If your creditors agree, one of our licensed Insolvency Practitioners would be appointed Supervisor of the IVA. This is to ensure that the IVA is administered appropriately.
Once accepted the IVA becomes a legally binding agreement between you and your creditors.
What are
the advantages of an IVA over bankruptcy?
IVA’s do not have the stigma that
is attached to bankruptcy so there is
less impact on your reputation.
A bankruptcy is advertised but an IVA
is not. An IVA is a private agreement
between you and your creditors.
You are more likely to lose your assets
in bankruptcy than you are in an IVA.
Some employment contracts that do not allow an individual to become bankrupt may deem an IVA to be acceptable.
Bankruptcy procedures tend to incur greater costs than those involved in an IVA.
Can I set up
an IVA if a Bankruptcy Order has been made
against me?
You would be able to apply for an Interim Order which would prevent any court proceedings being issued against you.
This would then enable the implementation of an IVA which would prevent any court action already commenced against you from proceeding. If the Bankruptcy Order has already been issued an IVA can still be proposed to your unsecured creditors.
Will I have to
sell my house if I set up an IVA?
You may be asked to sell your property. However you could be asked to release
some of the equity in it. This would be agreed prior to the proposal being signed.
Will I be
able to continue to run my business if I
enter into an IVA?
You would remain in control of your business providing you adhere to the terms of the IVA agreement.
Does an IVA
affect my credit rating?
There would be a note on your credit file and register alerting companies to
your IVA agreement.
What
happens if I miss any payments into the IVA?
If you miss your monthly payment into the scheme the Supervisor would contact you to discuss the matter. Your IVA proposal would usually state that if two or more payments are missed, the Supervisor would petition for your Bankruptcy.
However, the situation would be discussed with you prior to any action being taken. This is to determine whether there would be an alternative solution such as a revised payment plan. Any alterations must be agreed by your creditors.
Will my creditors
agree to an IVA?
To enable an IVA to be approved, 75% of your
creditors in value who vote will have need
to accept the IVA.
When an IVA is completed what happens?
The Supervisor of your IVA would issue you with a 'Certificate of Completion'; this is normally issued within one month of the final payment being received. A copy of this would be sent to the Insolvency Practitioners' Control Unit for their records.
To talk to one of our specialist team members please call 0800 458 3320 and ask to speak to a member of advice team who will be happy to discuss YOUR personal circumstances and help YOU decide which way is the best way forward for YOU
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