If your debt situation has ended up with the threat of legal action, it can be extremely stressful. An IVA (Individual Voluntary Arrangement) can be enormously helpful in these cases, and use the law to protect you against such threats.
If you can no longer make your debt payments, you need to speak to a professional expert as soon as possible. Insolvency Practitioners (IPs) specialise in these matters, and may suggest a number of different options, including IVAs.
Interim Order
Should you decide to go ahead with an IVA, your IP will apply for an Interim Order, which protects you from legal action for a short period. This allows you to take an appropriate amount of time to work out what you should do, with the help of your IP.
The IVA
The Interim Order stops any legal action against you while you work out and propose an IVA that suits you. The IVA will be drawn up by your IP and proposed to your creditors. If the creditors vote to accept the IVA, they cannot carry out any court action against you for the duration of the arrangement, providing you keep it going by making the payments.
Failure of an IVA
The only situation in which you may be pursued for the debts after an IVA is set up, is if the IVA fails because you have not managed to make the payments. This is why it’s so important that you get the right proposal in the first place, and do not agree to anything you do not think you can realistically manage.
If you do start having problems paying towards the IVA, for example if your finances get worse overall, you should speak to your IP immediately to see if there’s anything they can do to stop the IVA from failing.
Successful IVA
If you reach the end of your IVA period, and have managed to keep to the agreed payments, your debts will be settled, and your creditors will not be able to take any legal action regarding them. Even if the end result of the IVA is that you have paid back only part of what you originally owed, a successful IVA means that the debts must be written off, and so you can move on from them and look to the future.
IVAs are a legal contract, and an effective way to use the law to protect your interests.