A Guide To Assisted IVAs
If you owe large sums to several creditors and cannot make the repayments, there is hope. For the past twenty years, there has been a program called an Individual Voluntary Arrangement (IVA) designed to aid those owing large debts. IVA is a legal and government-approved method of resolving debt that helps individuals avoid the consequences of bankruptcy.
An IVA is a formal agreement made between a debtor and creditors he owes concerning how his debts will be paid. Depending on the agreement, debts may be paid either in full or in part. The debtor must apply to a court, and an insolvency practitioner (IP) must be appointed to supervise the arrangement.
The IVA is designed for those who owe over £15,000 to at least two creditors and who cannot afford to meet the repayments. To qualify for an IVA, you must be able to offer creditors at least £200 a month.
Some people, however, may not be able to manage even £200 a month if they are trying to pay down their debts alone. For those individuals, there is something called an Assisted IVA.
The Assisted IVA is for people whose debt is in one name only, though jointly-owed debts may be included in the Assisted IVA. To apply for an Assisted IVA you must meet the IVA requirements already noted and you must also have a spouse, partner or third party who is willing to contribute towards your IVA payments.
First, you must apply to an IP. The IP is a professional adviser who helps you make a decision about how to manage your debt. If you decide to pursue an IVA, the IP helps you document your proposals to your creditors.
The IP conducts an analysis of your income and expenditures. The analysis allows the IP to figure your monthly disposable income and to assess how much you can, with help, pay each month toward your IVA.
The IP also assesses the percentage of your total debt you can afford to pay back and how much needs to be written off. The IP drafts an Assisted IVA proposal, then you review it and sign off that you are accepting it. Once you have decided to proceed with an IVA, the IP becomes your nominee. The nominee tells the court about the IVA proposal. If the IP does not think the proposals are fit to put before a creditors’ meeting, he must tell the court. In that case, the court may end the IVA.
If the IVA proposal seems acceptable, a creditors’ meeting is held to give the creditors a vote on whether to accept it. If the creditors for 75% of the value of your debt vote to accept the proposals, the IVA is implemented. Once an IVA is approved, it is binding on all creditors.
After approval the IP supervises execution of the IVA to ensure that the terms of the IVA are fulfilled. While an IVA is in force, creditors bound by the IVA cannot take any debt recovery action against you. For an Assisted IVA, they must look solely to the Assisted IVA for repayment of the debts, either in full or in part.
When you complete your Assisted IVA payments, the remainder of your debts are written off and you are completely debt free.