An IVA is a legally binding contract betweenan individualandtheir creditors that forms part of the 1986 Insolvency Act. It is designed for people who cannot pay all their debt but can pay a proportion of it.
Can I Get Individual Voluntary Arrangement (IVA)?
An IVA is available to all individuals, Sole Traders and Partners who are experiencing debt problems. It can be used by people who own property and wish to avoid the possibility of losing it in the event they went into bankruptcy.
It is also often used by sole traders and Partners who have suffered problems within their business but wish to make sure it survives as they believe it will be profitable in the long-term.An IVAwill enable them to make a greater repayment to creditors than could otherwise be expected were they made bankrupt and the business consequently ceased trading meaning no debts at all would be paid.
IVA`s How They Work
When you have made the decision that an Individual Voluntary Arrangement is right for you, you will need to answer questions regarding your current financial situation. Based on the information you give, a repayment amount will be agreed with you and your creditors. Once the plan has been drawn up you will need to check and sign these and return them.
An application may then be made to the court for an Interim Order. Once this is in place, no creditors will be able to take any legal action against you.
For an Individual Voluntary Arrangement to be approved, creditors will be asked to vote either for or against the IVA. If only one creditor votes yes for the Individual Voluntary Arrangement it will be approved and agreed. However, if only one creditor votes against the IVA and they represent less than 25% of the debt in total, the meeting will be adjourned and other creditors who did not vote will be called upon for their vote.
If the creditor who voted against the IVA represents more than 25% of the total debt you owe, it will fail. This is because an IVA will only ever be approved if 75% in monetary value is voted for. If any of the creditors don't vote, it is assumed that they will vote for the Individual Voluntary Arrangement IVA.
The IVA is a legal contract. As long as you make the repayments, when the term of your agreement is finished, you will be clear of all debt.
During the legnth of your arrangement your financial situation will be checked regularly to see if there has been any change in your situation.
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