If you’re struggling to meet your debt demands you’ll know how stressful dealing with creditors can be. One of the advantages to using an IVA if you’re in this situation is that your Insolvency Practitioner (IP) handles all of the negotiations for you. Also, the terms of the IVA bind the creditors legally and prevent them from pursuing unwarranted action against you.
Negotiating with creditors
Anyone who can no longer manage to make their debt payments is of course free at any time to try and renegotiate the agreements that they have with their creditors. If you’ve ever tried this you’ll know that it can be a difficult process. It’s really up to the creditors whether they want to negotiate with you, and they can pursue you through the courts at any time if you don’t make your payments.
Protection from creditors
When you begin the IVA process, your IP will apply for an Interim Order. This prevents your creditors from taking action against you regarding your current debts for the time being. Once the IVA is set up, providing the creditors accept it and you stick to it, they cannot pursue you for the debts either.
While the IVA is elapsing the legal contract that the creditors have accepted as part of the IVA stops them from taking action against you. Once the IVA is complete, if you have kept to the agreement (i.e. made your payments), the creditors must consider your debts settled and cannot pursue them at any time in the future.
Acceptance
An IVA proposal is put to the creditors by your IP. The creditors decide whether to accept it through a vote, and any negotiations are handled by your IP. If the IVA is indeed accepted, you will no longer need to deal with your creditors direct at all. You simply make your monthly IVA payment (and any other transactions that may be associated with the IVA) and your IP administers the distribution of this among your various creditors.
Issues
If at any time you find you are struggling to make the IVA payments, you should contact your IP straight away. They may be able to negotiate an alternative plan on your behalf, and hopefully keep the IVA going. The IP is required to act in both your interests and the interests of the creditors, but will ensure that you are given the protection that the law provides from being unfairly pursued.