{"id":12165,"date":"2011-11-01T12:34:53","date_gmt":"2011-11-01T12:34:53","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=12165"},"modified":"2019-11-01T12:49:06","modified_gmt":"2019-11-01T12:49:06","slug":"how-ivas-work","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/how-ivas-work\/","title":{"rendered":"How IVAs work"},"content":{"rendered":"\n

If you have money worries and feel that you may be insolvent, you \nmight like to learn about an Individual Voluntary Arrangement, commonly \ncalled an IVA, and how it might help you. Knowing what an IVA is and \nunderstanding the IVA process makes it easier when you have to decide \nwhether to engage in this process or try some other possible solution \nfor your financial distress.<\/p>\n\n\n\n\n\n\n\n

We will look at some of the more frequently asked questions and \nprovide brief answers. Even if an IVA is not for you, at least you will \nhave a better understanding of one of the most popular solutions for \npersonal insolvency and be able to discuss it with friends or colleagues\n who may be faced with debt problems of a more serious nature than \nyours.<\/p>\n\n\n\n

Assuming you have debts and can\u2019t afford to make the agreed payments \nto your creditors you might still like to reach a binding agreement with\n them to repay what you can afford. Provided you have a regular income, \nan IVA may help you to reach such an agreement and to repay some of your\n debts in a reasonable and fixed time period. At the end of that time \nperiod, an IVA allows you to write off the remainder of your debts, \nprovided you have adhered to the terms of the IVA, as agreed by you with\n your creditors at the outset. These remaining debts are deemed to have \nbeen discharged.<\/p>\n\n\n\n

You may or may not have assets such as a house or a car. If you do \nyou will also reach agreement with your creditors how these assets are \nto be treated in the context of your IVA. You will not necessarily lose \nsuch assets, although you may have to make some contribution to your IVA\n in respect of your interest in them, such as the equity in your house. \nMost people entering an IVA can retain control and ownership of such \nassets.<\/p>\n\n\n\n

\"How<\/figure>\n\n\n\n

An IVA then is a formal and binding agreement to repay a portion of \nyour debt over a limited term – usually five years, but it can be for a \nshorter period. An IVA is binding on all parties to the agreement, \nnamely you and your creditors. Here are some of the frequently asked \nquestions.<\/p>\n\n\n\n

Must I include all of my debts in my IVA proposal?With\n the exception of your secured debts such as your mortgage or your car \nHP, all unsecured debts must be included in your proposal for an IVA.<\/p>\n\n\n\n

What are unsecured debts?Credit cards, loans, \ncurrent accounts, store cards, borrowings from friends or family, \narrears on utility bills such as telephone, gas or electricity, self \nassessment tax arrears and arrears on council tax or water charges are \nall examples of unsecured debts.<\/p>\n\n\n\n

Must all of my creditors agree to accept my IVA proposal?No.\n All your unsecured creditors have the right to vote on your proposal. \nIn practice, not all creditors exercise this right to vote. Of those \nunsecured creditors who do choose to vote, at least 75% of them, as \nmeasured by the value of your debts to them, must accept your proposal \nfor an IVA to come into being. One way to think of it is that each pond \nof debt is equal to one vote so the creditor to whom you owe the most \nmoney has the greatest voting power.  <\/p>\n\n\n\n

What about unsecured creditors who do not vote? They are still bound \nby the decision taken by the creditors who did exercise their right to \nvote.<\/p>\n\n\n\n

What about the IVA being binding? All accepted IVAs are registered \nwith the government. The main legislation governing the formation and \nconduct of IVAs is governed by the Insolvency Act (1986) together with \nsome more recent legislation.<\/p>\n\n\n\n

How much will I have to pay each month once my IVA commences?Only\n what you can afford. An income and expenditure statement is prepared \nand your monthly payment will usually be the difference between your \nincome (made up of what you earn in your employment together with any \nother income you receive such as pensions, dividends and benefits) and \nyour expenditure (made up of your day to day living expenses, including \nmortgage and car HP payments and the living expenses of any dependents \nyou may have such as your family). This difference is usually called \nyour disposable income or your DI.<\/p>\n\n\n\n

How long will I have to make these monthly payments into my IVA?The\n usual duration for an IVA is five years or sixty months. However, it \ncan be shorter than that if additional funds should become available. \nFor example, if you should re-mortgage your house, with the prior \nagreement of your unsecured creditors, thereby releasing an equity lump \nsum, and contribute some or all of this lump sum to your IVA, creditors \ncould agree to reduce the duration of the IVA, enabling you to be \ndebt-free in a shorter period of time.<\/p>\n\n\n\n

What about my mortgage or car HP payments?You \ncontinue to pay these directly to your secured creditors and they are \nallowable expense items on your income and expenditure statement.<\/p>\n\n\n\n

What about the administration costs I would incur in an IVA?All\n the costs are taken from the monthly payments you make into your IVA \nand these will have been agreed upfront with your creditors. You have to\n pay nothing more yourself.<\/p>\n\n\n\n

Can I get an estimate of these administration costs? You can do \nbetter than get an estimate. Any reputable provider of insolvency \nservices, the people who assist you in compiling your IVA proposal, will\n ensure that a summary of the costs of the IVA are included in the \nproposal itself and these will usually be fixed over the duration of the\n IVA. So, you will know up front what the costs of the process will be \nover the full duration.<\/p>\n\n\n\n

Where can I get advice on an IVA and what will it cost me?There\n are many firms offering insolvency services on a commercial basis and \npart of that service is to provide free initial advice. There are also \nsome charitable firms such as CCCS who are funded by creditors who can \nalso provide free advice. If you decide to propose an IVA to your \ncreditors, you are obliged by law to use the services of a qualified and\n licensed Insolvency Practitioner (IP) in compiling the IVA proposal and\n calling the meeting of creditors which will decide to accept it or \nreject it. The IP who acts for you up to and including the stage of the \nmeeting of creditors has the title of Nominee. Once your IVA is approved\n by your creditors, it is supervised and administered by your IP also, \nwho now has the title of Supervisor. Your IP (whether in the role of \nNominee or Supervisor) charges no fees and receives no income whatsoever\n until the IVA has been accepted by your creditors. The IP\u2019s fees then \ncome out of the monthly payments you have agreed to make into your IVA. \nIf your creditors do not accept your IVA proposal, your IP receives no \nfees whatsoever and you, the debtor, have nothing to pay.<\/p>\n\n\n\n

What other financial solutions could I consider?The\n main alternative options usually considered by people with personal \nfinancial problems are to obtain a consolidation loan or to enter a debt\n management plan or to go bankrupt or in some cases to obtain financial \nassistance from a family member. It may even be possible to manage your \nfinancial problems a little differently and find that you are not \ninsolvent after all. In such a scenario you may be able to manage your \nown financial affairs yourself.<\/p>\n\n\n\n

Can I get advice on all of my options and how do I go about doing this?A\n good first step is to contact several reputable firms who offer \npersonal insolvency services (just to make sure you are getting the best\n advice and that that advice is consistent). Alternatively you could \ncontact one of the charitable free advice agencies such as the CCCS or a\n local CAB office. You should not have to pay anything to get advice on \nyour options. You will need to provide full details of your financial \ncircumstances and following your consultation you should have a much \nclearer idea of what to do next. You may need several meetings to get to\n that point. When you are satisfied that you know and understand your \noptions, you are still free to walk away, with the benefit of the \nadvice. You do not have to commit to anything.   <\/p>\n","protected":false},"excerpt":{"rendered":"

Knowing what an IVA is and understanding the IVA process makes it easier when you have to decide whether to engage in this process or try some other possible solution for your financial distress.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-12165","post","type-post","status-publish","format-standard","hentry","category-iva-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/12165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=12165"}],"version-history":[{"count":1,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/12165\/revisions"}],"predecessor-version":[{"id":12187,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/12165\/revisions\/12187"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=12165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=12165"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=12165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}