What exactly is an IVA?

View PDF | Print View

by: stickystebee Total views: 15 Word Count: 462 Date: Sat, 2 Jan 2010 Time: 7:01 PM 0 comments


You may have come across the term IVA especially when it comes to debts. IVA actually stands for Individual Voluntary Arrangement.

IVA came about because the government notices that at a certain point, the spending levels in the United Kingdom far outweighs the average income levels of the citizens. This means that a growing number of people have debts that are beyond their capacity to pay. In order to remedy this situation, the government came up with the Individual Voluntary Arrangement (IVA).
The IVA arrangement goes something like this, individuals with debts approaches debt advice or specialist debt consolidation establishments that will protect them from personal bankruptcy.

IVA is just the formal arrangement between the debtor and creditor on the amount of the debt that needs to be paid. In order to avail of the IVA, the first step that the debtor undertakes is to apply to the court. Then once approved, he hires an insolvency practitioner. An agreement between the debtor and creditor would then be reached on the percentage of the debt which has to be written off and the amount that needs to be paid. The agreement is legally binding.

A very important part of the process is find an authorised Insolvency Practitioner which will negotiate in behalf of the debtor. If you do not know any practitioner then you can approach the local courts. They often have a list of the names of the local practitioners and the debt consolidation organisations spread all throughout the UK.

Once an Insolvency Practitioner is appointed, they will apply for the interim order in court. The purpose of interim order is two-fold: to prevent creditors from filing a bankruptcy petition and to prevent creditors from taking other actions without the approval of the court.

The roles of the Insolvency Practitioners are: to tell the court the debtor's proposals and to arrange a creditors' meeting in order to hear their opinions regarding the proposals. The Insolvency Practitioner will send the creditors a letter detailing the date of the meeting and the repayment proposal made by the debtor. Those who are mentioned in the notice are required to attend and are bound to the arrangement. If not all of the creditors are informed of the meeting then the arrangement might not be successful.

On the said meeting, the creditors vote to accept the repayment proposals or not. To make the arrangement binding, the creditors present must comprise of more than 75% of the total debt amount and they should favour the proposed agreement.

The Insolvency Practitioner then supervises the arrangement and overlooks payment to the creditors as per agreement.

Source: http://www.breezearticles.com

About the Author

David Salt writes for debt-free.org.uk and takes great pride in helping people to be debt free






Rating: Not yet rated

Comments

No comments posted.

Add Comment


Enter the code shown

Visual CAPTCHA