Before you decide to enter into an IVA, you need to understand how an IVA works.
The whole IVA process takes around 5 weeks and you would normally go through the following stages:
INTERVIEW STAGE – you will speak to a debt consultant. They will run through your financial situation and talk through your options. They will then advise whether an IVA is right for you. If an IVA is the best solution for you, the debt consultant will capture the information they need to draft an IVA Proposal.
APPLICATION STAGE – an IVA Proposal will be drafted which states your assets and how much money you owe. It also details how much you can afford to contribute each month under an IVA and how much money your creditors can expect to receive.
The Proposal will estimate how much your creditors would receive if you were to go bankrupt and the draft proposal will be sent out to you, for you to read over and sign.
You will be asked to provide documental evidence to prove that the information you’ve provided is correct, for example, pay slips, utility bills, statements etc.
CREDITOR STAGE – when your signed Proposal is received, it is sent out to all your creditors together with a report and recommendation that they should accept the IVA Proposal.
IVAs can only be put together by Insolvency Practitioners (accountants who specialise in insolvency work). As professionals, Insolvency Practitioners act in everyone’s best interests (yours and your creditors) and consequently your creditors are guided by what the IP tells them, therefore, only IVA Proposals that they think will be acceptable to everyone will be recommended.
VOTING STAGE – when the proposal is sent to your creditors, a meeting is called where your proposal is discussed and your creditors vote in favour of it or against it. The meeting will take place about 3 weeks after the proposal is sent to your creditors.
At least 75% of your creditors must approve the IVA for it to go ahead. If it is approved, all creditors must accept the deal and are then said to be bound by it, even if they voted against it at the meeting.
SUPERVISORY STAGE – if the creditors accept the IVA, an Insolvency Practitioner becomes the Supervisor of the IVA. The Insolvency Practitioner will write to all the creditors, telling them the outcome of the meeting and then the IVA formally starts.[/accordion_section]
[accordion_section title=”How long does an IVA last?”]An IVA normally lasts for 60 months (5 Years), after which time you are left debt-free from the debts included within your IVA. You should be aware that your credit rating may be affected for a minimum of 6 years.