Advice On Applying For An Iva (individual Voluntary Arrangement)

An Individual Voluntary Arrangement (IVA for short) is an agreement between you and

your creditors which states new terms on which the money owed should be repaid. The terms are typically a compromise on the debt, which allow creditors to recover at least some of the money owed to them.

By adhering to the terms of an IVA, you can write off as much as 75% of your total debt. Also, your professional status will not be affected and details will not be made public (as happens in bankruptcy cases). The requirements for proceeding with this course of action are as follows...

- A minimum of $30,000 of unsecured debt

- Unable to meet present debt repayment terms

- Can afford at least $300 a month for payments to creditors under an IVA

Contacting a specialist IVA practitioner is the first step that you need to take if you want to proceed with an IVA. The sooner you do this, the better, as they will be able to apply for an interim order which prevents any bankruptcy petitions being filed against you whilst the IVA is under consideration.

Your IVA representative will ask the court to call a creditors meeting so that the proposed IVA can be discussed. If the court thinks that your proposal is viable, then details of the meeting are sent to each of your creditors. Do not withhold details on any of your creditors as only those that the court are told about will be bound by the IVA. Any you miss out can still take full legal action against you even if your IVA proposal is accepted and you adhere to the terms of it.

At the meeting, your creditors vote on whether to accept your IVA proposal. If enough creditors (over 75% in value of the creditors present in person or by proxy) vote in favor, the proposal is accepted. If accepted, it is binding all creditors that knew about the meeting, regardless of whether they voted 'no' or did not attend. You will then work with your IVA practitioner to see out the terms of the agreement. At the end of the agreed period, if you have fully adhered to the terms of the IVA, you will be debt free. Your creditors can no longer pursue you under any circumstances.

Although an IVA involves less risk than a bankruptcy, assets such as your home and savings may still be at risk. Of most interest to creditors are your releasable assets. Your home normally remains untouched, except for the possible release of some of the equity available at the end of the IVA.

by: Mark Walters

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