Assuming that you know that you are currently insolvent you really need to find a solution. Here is how to go about it. First of all you will need to decide who to go to for assistance and debt information. Next is to determine just what obtaining that advice will cost. Whichever company provides the advice should clarify the various options which might be available. You’ll then need to ascertain whether to petition for bankruptcy or to go into an Individual Voluntary Arrangement with your lenders or maybe to embrace some other solution that will more effectively fit your circumstances. You might be able to get financial assistance from your family or if there’s any doubt about your insolvency it might be feasible to obtain a consolidation loan and pay off all of your obligations over a lengthier timeframe than your current loans permit as they exist.
The first task then is to look for guidance. Talk to at least one reliable professional supplier of insolvency services or get advice from your local CAB office or possibly talk to the CCCS. You might carry out all three of these things. Determining if you are insolvent shouldn’t cost you anything other than time. While you’re at it, determine if getting advice costs you anything and also at what point can you walk away without incurring any costs. Be careful if the debt consultant you use is ambivalent concerning this issue. Insist on responses, ideally in writing. Hopefully all choices will be thoroughly explained to you helping you to choose well as to which option is right for you. Let’s assume that you opt to present plans to your lenders for an IVA and that you go with a selected insolvency firm to aid you in that approach. What’s the next phase and what exactly do you have to do?
Assuming that your insolvency firm has affirmed that you are actually insolvent, you’ll need to supply documents in regards to your liabilities and assets, your earnings and expenditure and full details of your personal and financial circumstances, in particular relating to how the liabilities have been incurred. You will have to co-operate completely with your Insolvency Practitioner (IP) and any team members assigned to your case. You must provide recent pay-slips, creditor statements and correspondence, mortgage and HP statements, valuations of any property you may have for instance a home or car and detailed information of your living circumstances and those of any dependants you might have.
You will be required to authorize your IP and case manager to communicate directly with your lenders as your representative. You might like to or indeed you may have to meet with your IP face to face. Your IP will then put together a proposal for an IVA and send it to you to verify and sign off. You return the signed proposal to your IP who will decide on a suitable date and venue for a meeting of your creditors and inform you and your creditors accordingly.
So far so good. The IP who you have nominated to help you and is consequently named your nominee holds the Meeting of Creditors. In reality, creditors rarely show up at such meetings personally. They typically communicate in writing with the IP and supply proofs of debt and voting instructions by letter, fax or e-mail. The voting directions will normally be to consent to or reject your IVA proposal in a procedure that is called ‘proxy voting’. This basically means that your lenders will not be personally present to cast their vote instead they authorize by proxy someone else, usually the chairman of the meeting, to vote according to their directions. Your nominee will usually be the chairman of the meeting. Lenders could also vote to amend the stipulations of the proposal in what are called modifications. You will be kept abreast of the progress of the meeting and it is your decision as to whether to agree to agree to all modifications requested by your creditors. The nominee communicates with your creditors for you and can adjourn the meeting for up to a fortnight as you consider your alternatives regarding any modification lenders have proposed. Provided no less than 75% by value of voting creditors agree to your proposal and provided you agree to any modifications made by your lenders, then your IVA is accepted. Of course you can resolve not to carry on and to withdraw your IVA proposal at any point up to and including the meeting of your creditors. Should you withdraw your proposal, you should be no worse off than before and you should not sustain any costs for work performed up until that point by your nominee and his or her staff.
If your IVA is accepted in line with the voting rules mentioned above, it will become legally binding on you and on all of your unsecured lenders, which includes those lenders who chose not to vote at all. The chairman of the MOC then prepares what is known as the ‘Chairman’s Report’ of the meeting and circulates it to all your lenders and to you. In it is described the outcome of the MOC and what you have to do to carry out and successfully complete your IVA. It also establishes the name of the IP who is going to supervise your IVA. This is usually the same IP who acted for you as nominee up until the MOC and will now act for you as your Supervisor. From that stage all of your unsecured debts will be dealt with in your IVA and your lenders must give up chasing after you for repayment. You instantly commence making monthly payments into your IVA fund via your Supervisor and you must contribute any other funds required in the terms of your IVA and any modifications thereto. Your supervisor is in charge of dispersing these monies to your creditors.
Your IVA voyage now begins. For many, this point in time is one of absolute relief and joy. Debtors can look forward to the cessation of lender harassment. Provided they stick to the terms and conditions of the IVA they can expect to be free of debt inside five years or whatever the agreed upon duration of the IVA is. The supervisor must obviously review their changing financial circumstances and report regularly to lenders. If the debtor’s income grows above any rise in the cost of living, then a part of the extra net income must be contributed to the IVA. So long as payments are maintained there isn’t any reason why the IVA should not be maintained and successfully concluded. Even if there is a major adverse change in the debtor’s financial circumstances the supervisor might be able to offer creditors proposals for a variation to the IVA, to allow the borrower to finish the IVA and to become free of debt. Complying with the terms and conditions of the IVA offers the opportunity of being debt-free, worry-free and creditor-free. The success rate for people going into IVAs is quite high, particularly when they utilize the expertise of reliable insolvency firms and they can look forward to successfully navigating their IVA journeys to the end.