After much consideration, you have decided that an IVA is the best solution to your continuous debt problems. So what next? Here we will discuss IVA procedure in greater detail to give you a better idea of the process involved.
Firstly, you will meet up with your Insolvency Practitioner, or IP, who will set up an IVA proposal. Once the proposal has been agreed upon by both you and your IP, your IP may choose to apply to the county court for an 'Interim Order', an order which is put in place to prevent your creditors from pursuing you. However, this is rarely needed.
Once the interim order is in place, your creditors are not allowed to start bankruptcy proceedings against you; in fact, they are not allowed to take any sort of debt enforcement action against you without prior permission from the court.
After receiving sufficient and assessing your situation, your IP will prepare an IVA agreement and send it to your creditors. In this IVA agreement, your IP will request a meeting with your creditors. Once the IVA agreement is sent, it is important that you follow up and make sure your creditors have received the notification. Should your creditors not receive the notification, they are not bound by the terms set in the IVA and can start bankruptcy proceedings against you.
The creditors meeting will usually take place within two weeks of sending out the agreement, and no longer than 4 weeks after sending it. In the meeting, which is usually chaired by your IP, the creditors will get the opportunity to vote on whether they accept the proposal, reject it, or want it amended. There may be some disagreements about the terms stated in your proposal, and it is up to your IP to sort it out with the creditors and to make the necessary amendments. You will not normally be required at this meeting, however, it would be wise to sit close to the phone through the duration of the meeting and soon afterwards. It is also possible that the creditors will not attend, instead opting for their vote to be cast by a proxy.
After taking time to consider your IVA proposal, creditors will vote on it. For the creditors to agree on an IVA, 75% of them must agree to the terms 'by value'. This means that the votes are not based on a single head count, but by the amount you owe each creditor. So if you owe a majority of your debt to a single creditor, they would then have the deciding vote on your proposal regardless of the number of creditors.
If the IVA proposal is accepted, all creditors, regardless of whether they have approved the proposal or not, are bound by law to accept it. This means that they cannot take any further action against you if you stick to the terms stated in the IVA. Once the proposal is accepted, it is up to the IP to supervise the IVA, and you will need to make a single monthly payment into a fund that the IP will manage. It is highly important that you keep up with the payments or the IVA will become invalid and your creditors will be able to sue you for bankruptcy. If you think about it, it is only fair for your creditors to want to take action should you fail to stick to your agreed IVA proposal. If they are prepared to write off a large part of your debt and you still do not make payments, what else are they supposed to do? All you have to do is follow the terms of the agreement, and soon you will be free of debt.
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