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The start of the IVA process

In every case the first step to entering an IVA should be to discuss in full your circumstances with a debt or IVA adviser to confirm if an IVA is the correct debt solution for your circumstances. Alternative solutions should also be discussed with you.

Once you have made the decision to proceed with an IVA you will agree with your IVA adviser how much you can afford to pay into your IVA each month. You should discuss any assets that you have and whether you will be required to release any equity from these assets. If you have a property that would generate more than £5,000 of equity (if an 85% loan-to-value re-mortgage were to take place) there is a possibility you will be asked to release this into your IVA for the benefit of your creditors if it is actually possible to do so.

IVA documentation

You will need to provide some documentation to your IVA adviser:

  • Photographic identification (for example your passport or driving licence).

  • Council tax bill or other recent utility bill.

  • Your creditors details; this could include recent creditor statements.

  • Three recent payslips and evidence of any benefits you receive, including child benefits.

  • Three recent monthly bank statements.

  • If you own a property, an estimated valuation and a mortgage redemption statement.

  • If you possess a car on a lease or hire purchase, the original credit agreement.

  • You may be asked for other documents depending on your circumstances.

All the information you provide helps to put together your IVA proposal, so it is essential (and in your best interests) that the information is correct.

IVA proposal

Together you and your adviser or Insolvency Practitioner will put together your IVA proposal to be presented to your creditors. Please remember that it is your proposal and if you have any questions you should not be afraid to ask them.

Do not be pressured into making higher IVA payments than you know you can afford. If the IVA goes onto fail because you are unable to make the contributions you could end up being made bankrupt.

It is not uncommon for an IVA case manager to put together your proposal and to be your first point of contact regarding your IVA. However, you should still be able to contact your Insolvency Practitioner and have a telephone conversation with them prior to signing your IVA proposal. Ultimately they are personally responsible for overseeing your IVA from start to finish.

Once you are completely happy with your IVA proposal, a date for the creditors meeting will be agreed with you and your proposal will be sent to creditors for their consideration. If a creditor has any queries they will contact your Insolvency Practitioner to discuss them.

IVA voting and modifications

Creditors may begin to vote in advance of the meeting date. They can vote to accept your proposal with or without modifications (or indeed reject it).

Modifications could involve you being asked to make a greater contribution than you had originally anticipated. It is important that you discuss any modifications with your IVA adviser or Insolvency Practitioner address any concerns you may have. If necessary, ask for time to think about the modifications before making your final decision.

You will need 75% of creditors to vote in favour of your IVA proposal for it to be approved.

Once your IVA is approved your IP will draw up a “Chairman’s Report” which will include details of the creditors meeting and how the creditors voted, including any modifications to your IVA.

The Chairman’s Report will be forwarded to the creditors. Your Insolvency Practitioner will also be responsible for informing the Insolvency Service, Land Registry and any other person with an interest in your property (assuming that you own one).

If your IVA is not approved

It is usually possible to negotiate with creditors to come to a mutually acceptable arrangement, but sometimes IVA’s are not approved.

If this happens your IVA company should discuss other options such as a debt management plan or bankruptcy with you.

Once your IVA has been approved

Your chosen Insolvency Practitioner will now become your IVA “supervisor” and will be responsible for overseeing your IVA through to completion.

Your monthly contributions will be placed into a client bank account in your own name.

Any IVA fees and other costs associated with your IVA will be deducted from the money paid into this account before any money is paid to creditors.

Creditors will receive any money due to them. It is not unusual for a creditor distribution to take place once a year.

IVA annual review

Every year you will have an annual review to see if your circumstances have changed. This might include an increase in household bills or an increase in salary. If there has been a significant increase in salary there is a possibility that your contributions will increase.

For your annual review you will be required to provide your P60, recent wage slips and bank statements.

If you miss an IVA payment

If at any point during your IVA you are unable to make your monthly contribution it is advisable for you to contact your IVA company immediately to see what they can suggest to help you.

They may allow you to miss a payment into your IVA and then add this payment onto the end of the IVA. Effectively this would be an extension of the term of the IVA. If you have a major change of circumstances, for example losing your job or a relationship split, your IVA company may want to hold a “variation meeting” to change the terms of your original IVA. They will inform your creditors regarding what aspects of your circumstances have changed, how this has affected your original contributions commitment, and how much you can pay each month going forward.

If you do not make contact with your IVA company and continue to miss payments you risk the failure of your IVA. You should check the terms of your original IVA proposal if you are concerned that your IVA may need to fail. Funds may have been set aside for the Insolvency Practitioner to petition for your bankruptcy if the need arises under the terms of your IVA.

If a bankruptcy petition is presented to you, you should seek advice quickly. Any assets that you own could be at serious risk.

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