An Individual Voluntary Arrangement (IVA) is a debt solution which involves yourself and your creditors coming to a legally binding agreement to extend your loan term and allow you to make reduced monthly repayments over this new timeframe.
Whilst an IVA can provide you with a flexible option to address your debt and alleviate the financial strain of debt in the short term, they nevertheless come with a number of dangers which could cause a long-term substantiation of your problems.
The following page will elaborate on how your presiding insolvency practitioner will manage your IVA over its course, and what to do if your situation changes whilst it is running.
Managing the IVA
Once you have acquired the majority approval from your creditors to authorise your IVA, all parties will become legally bound to its terms and conditions.
Upon its official instigation, the court will legally assign your insolvency practitioner the task of supervising your IVA. Thereafter, your IP will ensure that all of your IVA payments are made in-full and on-time, so that they can be redistributed amongst your creditors.
You are legally obligated to uphold all the conditions of your IVA and make full payments each month towards your IVA. If your financial situation worsens whilst you are on an IVA and you are unable to make your payments, then you should get into contact with your IP immediately and see whether they can help negotiate a new deal for you.
What you should do if your situation changes
If your situation changes whilst your IVA is still running, then it is vital that you notify your IP of this immediately. Changes worth alerting your IP about include:
- If you change your place of residence
- If there is a sudden change in your employment status or financial condition
- If your salary rises or falls
In most cases, you will be allowed to make the appropriate alterations to your IVA if your financial situation improves or worsens.
Each year, your insolvency practitioner will conduct an evaluation of your IVA, in order to check whether all terms and conditions are being upheld by the parties involved in the process. They will analyse your financial situation closely and will usually ask you to provide them with some of your recent financial documents, such as your payslips and bank statements. If they find that you have withheld any information from them intentionally, then they might terminate your IVA agreement, so it is imperative that you are truthful when it comes to your review.
What happens to my property during an IVA?
During the final year of your IVA, your insolvency practitioner will likely request that you receive an official valuation of your property, so that they can ascertain whether it is worth releasing some equity within it to contribute towards the repayment of your debt. If they conclude that this would be beneficial to the interests of your creditors, then they might ask you to remortgage your home.
How will I pay my creditors during my IVA?
You will need to make a single monthly contribution to your insolvency practitioner each month, which will then be tasked with redistributing the money fairly amongst your creditors. The amount you pay each from will be clearly specified in the initial terms of your IVA, though your IVA might take a percentage of your payment to cover their fees.
What happens to the assets that are part of my IVA?
After your IVA has been set up, then all assets that you manually placed into the agreement will be seized by your insolvency practitioner and sold off to contribute towards the repayment of your creditor debt.
Can I ask my insolvency practitioner to cancel my agreement?
If you feel as if your IVA is poorly suited to you, or would like to use a different debt solution, then your insolvency practitioner can secure your passage off an IVA if you request them to. It is important that you discuss the issue with them first before coming to a final decision because it is vital to your long term financial security that you are made of the ramifications of cancelling your IVA and the impact it would have on your life.
The IVA protocol
All insolvency practitioners and the majority of creditor’s are bound to a voluntary code of conduct, entitled the IVA Protocol. The protocol essentially specifies the standard procedure that an IP must follow when they are processing and managing an IVA, as well as outlining the terms and conditions that all sides are bound to.