An IVA can be conveniently broken down into five distinct phases. Just as Shakespeare wrote about the Seven Ages of Man describing the various succeeding phases of the life of a person, so we can look at the phases of an IVA: firstly there is the planning and decision making; secondly comes the preparation of the IVA proposal; thirdly comes the Meeting of Creditors; fourthly the commencement of the IVA proper – the crucial early period and finally comes the fifth and final phase, the completion of the IVA.
Of course it may be a little arbitrary to say that there are just five phases since the duration of an up and running IVA could be as short as six months and be as long as seven years. However, the typical IVA runs for five years.
The first phase of the process may not be without its difficulties and we will start with that. If you are insolvent or even think that you may be, you may consider entering into an IVA. Like any good process, planning features heavily in this first phase while execution will feature heavily in the later stages which we will look at later on. Even if you are insolvent, you may learn during this first phase that an IVA is not for you and that another financial solution may be best for your circumstances.
The first phase must start with verification of your personal insolvency. If you determine that you are insolvent and that you want to do something about it, you have some key decisions to make which may be summarised as a series of questions. Who shall I go to for help and debt advice? How much will it cost? What options will be explained to me? Will I opt for bankruptcy or an IVA? Is there an alternative solution that better suits my circumstances such as Debt Consolidation or a Debt Management Plan (DMP)? Is there a possibility of getting financial help from my family?
To get the answers to these questions it is important to shop around for help. It makes sense to talk to CAB, to StepChange and to at least one reputable commercial provider of insolvency services. Find out early in the process what getting initial advice costs. Almost all private insolvency firms provide this initial advice free of charge. The least you would expect from such an initial consultation is confirmation of your insolvency and an initial draft of your income and expenditure. Reputable firms will have formed a pretty good idea at this stage which insolvency process best suits your situation. Ensure you have all options explained to you and that you clearly understand the explanations to enable you to make the right decisions. Assuming that your best option and the one you prefer, is to offer proposals for an IVA to your creditors, you should now choose an insolvency firm to assist you in the next phase which is the preparation of the IVA proposal, which we will look at in the second article.