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An Individual Voluntary Arrangement or IVA was introduced via. The Insolvency Act of 1986 and is a binding Legal procedure. It will allow a debtor to make a proposal, which is formal, to their creditors to re-pay unsecured debts without the need for Bankruptcy.
Most IVA cases are centre around affordable monthly repayments over a period of 5 years. This payment is carefully calculated with the debtor’s assistance and considers their assets, liabilities, total income and cost of living. The agreed figure to be repaid monthly will be based on those figures ensuring that an arrears situation will not occur in the future with regards to Mortgage/Rent, Council tax and Utilities payments.
Lump Sum IVA is a lesser known arrangement and not widely used but allows for a one off payment from such as a relative.
An IVA is:-
Regulated by The Insolvency Act of 1986, a formal and binding agreement between debtor and creditor which must be under the supervision of a Licensed Insolvency Practitioner ( IP.)
AiB Ltd can:-
Consider your situation, produce a Statement of Affairs, prepare a Strategy and bundle on your behalf following an assessment.
Following that an appointed IP will act as Nominee who will then produce a proposal for presentation to your creditors which will include the schedules Creditors Meeting. 75% or greater of the value must vote to accept the IVA for approval (those who vote against the IVA must accept it if the 75% is obtained.) Following approval the IP then assumes the role of Supervisor.
Should any creditors apply unnecessary pressure an Interim Order may be obtained and will cease legal action commencement plus put on hold existing legal actions prior to the Creditors Meeting.
An IVA is registered with the Court but not publicly advertised therefore not shown on your credit file. When the IVA term expires, without problem, a credit file is satisfied and will show as such.
Businesses can trade on and generate revenue.
Costs of administration are usually less then Bankruptcy which leaves more in your payment pot.
Does not have the perceived stigma of Bankruptcy.
Debtor and IP work together in deciding asset distribution that will be distributed to the creditors providing it is at no detriment them compared to a Bankruptcy Arrangement so it may be considered to suit the debtor.
Tax relief may be claimed, as with Bankruptcy, against those bad debts and lesser restrictions applied as laid upon a Bankrupt. Professional positions, Pubic Office positions, Army-Navy-RAF positions and Directorships are unaffected and you may use a business name to trade.
75% of creditors, of value, who must give approval for the IVA to be put in place whilst being aware that they will be accepting a lower figure that those monies owed.
Normally only suitable for unsecured debts of £15,000 or more.
An IVA period is normally 5 years, during which the IP closely monitors and supervises the debtor.
The debtor cannot have an overdraft facility but can operate a normal
account.
If the IVA fails Bankruptcy action may then be brought by a creditor
including the IVA costs in many cases.
House and assets remain at risk if creditors wish not to include them in the IVA. The creditors would normally demand equity release from property in the fifth year of the IVA subject to the loan value level.
Every IVA is subject to recording in the Public Register. Because it will appear on your credit file future applications for credit may well be affected and remains so for 6 years. Even when 6 year IVA period has passed Mortgages and Loans may still be difficult to achieve and you may well be subject to much more stringent acceptance criteria.
Future Inheritance and existing assets will be taken into account by the IP for any increase in their value which may allow a better the dividend to be made to creditors. Transferring assets in a way so as to dismiss your credit liability will not be accepted by the IP. and will be dealt with as evading techniques however Will amendment may be allowed to assist.