If you’re being pursued for debts, it can seem like you have fewer and fewer options as time passes, and that the time to sort things out is pretty short. However, IVAs are specifically designed to help people in these sorts of situations.
Stop
If you do decide to explore using an Individual Voluntary Arrangement, one of the first things that your Insolvency Practitioner will do is apply through the courts for an Interim Order. This effectively presses the pause button on your debt situation, and prevents your creditors from taking legal action against you in the short term. This period gives you and your IP time to work out and propose an IVA.
Interim
Your IP will need to go through your finances in detail before you can propose an IVA, as well as discussing your various options with you. It’s difficult enough taking decisions in this type of situation, and the feeling that the clock is ticking certainly doesn’t help. This is why the Interim Order is hugely helpful, as it gives you the breathing space you need to work out a plan that is going to help you in both the short and long term.
Debts covered
You need to make sure that you let your IP know about all of the debts that you currently have, so that they can best advise you. An IVA will ideally include all of your unsecured debts, and so you should make sure you pass the details of these onto your IP.
When you propose an IVA, your creditors will be invited to a meeting at which they consider it and vote on whether to accept it. As long as enough of them vote to accept it, it will cover all of the debts involved, even if those particular creditors did not vote to accept it. This means that if it’s accepted, it’s accepted for all of the debts you proposed it for.
Protection
Once the IVA is in place, which doesn’t normally take long, the creditors whose debts are covered by it cannot take any legal action against you. The IVA is a legal contract, and so affords you the protection of the law. As long as you meet your IVA requirements, you do not have to worry about being pursued through the courts.
Problems
Should your IVA fail, for example because you fail to keep to the payments, your creditors may once again be able to pursue your debts. For this reason you really do need to let your IP know immediately if you’re having trouble making the payments, as they may be able to step in and keep the IVA going, by renegotiating it with your lenders.
Success
If your IVA is a success, and you get to the end of the term having kept up with the payments, the debts listed in it will effectively be settled. Even in cases where you have only paid part of the debt back through the IVA, your creditors will not able to take any further action against you.