IVA Facts & how IVA's
work |
Backround facts on IVA's (Individual
Voluntary Arrangement's) and how they work |
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| What Is An
IVA? |
| An Individual Voluntary Arrangement is often a
preferable alternative to bankruptcy from both your point of
view and that of the creditors. In practice most creditors try
not to resort to bankruptcy petitions. This is because the
fees associated with bankruptcy are high and, unless there are
significant assets to be realised within the bankruptcy, there
is often little left for the creditors. |
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| Will I have to pay for this service? |
| Unlike most fee charging organisations when you
consider an IVA through the UK Insolvency Helpline, you will
not pay any upfront fees. The monthly payments that you make
into your arrangement will cover the payments to your
creditors as well as our fees for putting together and
supervising the arrangement. In short, the creditors agree
that they will accept a lower return from the arrangement. In
addition you only start paying once your arrangement is agreed
so if we are unsuccessful, you will not have to pay for the
work that we have done for you up to this point. If you would
like more information about this please call us and one of our
advisers will be happy to explain it in more
detail |
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| What are the
advantages? |
- You may only pay back a percentage of
your debts
- You only have to make one monthly
payment or in some cases, a one-off lump sum
- The Arrangement is legally binding so
that your creditors cannot change their minds once they have
agreed
- Once the IVA is in place your creditors
cannot bring any other action against you as long as you
maintain your agreed monthly payment
- You are able to operate a 'normal' bank
account as long as it does not have an overdraft facility
- No publicity in the local papers
- It may safeguard your property
- Does not affect the ability to hold
public office
- An IVA does not affect your
professional status
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| What are the
disadvantages? |
- IVAs are only suitable if you or
another person can afford to make an offer of repayment to
your creditors
- Your creditors have to agree on the
arrangement through a vote, However we will not suggest this
course of action to you unless we think there is a good
chance that your creditors will accept your offer
- If you do not make the payments to the
IVA it is likely that the Arrangement will fail and your
creditors will be able to take other action against you. It
may also result in your bankruptcy
If we feel that an IVA is not the most
appropriate solution for you, we will suggest an alternative.
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| The Process |
| In every case, the first step is to assess whether
an Individual Voluntary Arrangement is the most suitable
arrangement for you. If we feel that it is not or you decide
that it is not what you want to do, we will always suggest an
alternative. |
| Once we have established that an IVA is
appropriate, we will work together with you to determine how
much you can realistically afford to pay into an arrangement.
To do this we will need to ask you a number of questions about
your financial situation. We will then discuss the figures
with you and agree on a monthly repayment to your creditors.
Other aspects of your financial situation will also be
discussed such as the value of your assets. We will also need
to ensure that all your creditors (lenders) are included
within the arrangement. |
| When your proposals are drawn up and you are happy
with them, you will need to sign them and get them witnessed
by a solicitor or a commissioner for oaths. We will then make
an application to court for an Interim Order. When this is in
place your creditors cannot take any action against you and we
can hold a meeting so that your creditors can consider your
proposals. If enough of your creditors (75% in value of those
creditors who vote) agree to your proposals the arrangement
will become legally binding on them. All you then have to do
is make the agreed payments. Once you have fulfilled the terms
of your arrangement you will be free from your debts, even if
you have only repaid a fraction of what is owed. |
| During the arrangement we will conduct regular
reviews of your monthly payment. If during the period of your
arrangement you find that you cannot meet the agreed payments
we can ask your creditors if they will agree to vary the terms
of your proposals. We want your arrangement to succeed and
will do everything we can to help you through it. |
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| Advice for Residents of
Scotland |
| We are able to offer advice on debt management
plans, administration orders, bankruptcy or if you live in
Scotland, sequestration, trust deeds, as well as general
advice on how to deal with your creditors and prioritising
your debts. |
| A
Trust Deed is a formal legally binding agreement between an
individual who is unable to pay his/her creditors and a
licensed Insolvency Practitioner (the Trustee). The Trustee
will put together a form of proposals to the Creditors for
approval and administer the Trust Deed A Trust Deed is a form
of informal bankruptcy but still regulated by The Bankruptcy
(Scotland) Act 1985. |
| Provided certain conditions are met, the Trust Deed
may be registered as "protected", this prevents creditors from
taking further steps eg sequestration (bankruptcy) to recover
debts due to them |
| The advantages of a trust deed are that it can take
the pressure off as all correspondence and queries from
creditors are dealt with by the Trustee. It puts the debtor
rather than creditors in control of the debtor’s financial
situation. A Trust Deed is usually more flexible and costs
less to administer than sequestration. It also allows the
debtor the right to hold certain public offices - which would
not be the case with sequestration. It may be possible for
companies to continue trading and individuals to retain their
directorships. |
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