All about IVAs
What is an IVA Proposal?
An IVA Proposal is a document that shows your lenders how you and your IP (Insolvency Practitioner) think your IVA should work out. So it'll give them details about you, your debts and your finances: the idea is to show them that an IVA really is the best way for you to tackle your debts.
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What exactly is an IVA Proposal?
An IVA is an Individual Voluntary Arrangement - it's an agreement between you and your unsecured lenders. Before they can agree to anything, they need to know exactly what it is you're proposing, so they can decide whether or not they want to approve your IVA.
For your IVA to go ahead, you'll need to get approval from lenders who account for at least 75% of your unsecured debt (by value, not by the actual number of debts). So your IVA Proposal will need to convince them that an IVA would be fair to them as well as you.
Since an IVA is a legally binding arrangement, you can't arrange one yourself and you can't draw up your IVA Proposal on your own - you'll need to work with an IP.
What information will my IVA Proposal include?
It'll tell your lenders all about you and your finances:
- How you came to be in the situation you're in today
- About your debts
- About the lenders you owe money to
- About your expenses
- About your income
- About any savings you may have
- About any property you own, along with:
- estimated values
- details of any borrowing secured against it
- Other relevant information
It'll also lay down the proposed terms for your IVA, including:
- How long your IVA would last
- How much you'd pay into your IVA
- Who would be handling your IVA
- How much they'd charge in fees throughout your IVA
Who can access my IVA Proposal?
Your IVA Proposal is something that's between you and your lenders - no-one else will be able to access it online or anywhere else (although your credit report will show that you're on an IVA if your IVA does go ahead).
The obvious exception to this is your Insolvency Practitioner (IP), along with the other people who work with them at the Insolvency Practice you're working with (such as Freeman Jones). They'll need to know all about your finances so they can help you make your IVA a success, but they're not permitted to discuss you or your situation with anyone who doesn't need to know about your IVA.
What happens to my IVA Proposal?
Once you and your IP are happy with your IVA Proposal, your IP will send it to your lenders. They'll vote on it at a 'creditors meeting', which is their official opportunity to tell your IP whether or not they approve the terms you've proposed. You'll have to make yourself available at the end of the phone when this meeting takes place.
If enough of them approve the terms, your IVA can go ahead.
Can my IVA Proposal change?
Yes. Your lenders might request changes to your IVA Proposal. If they do, your IP will discuss them with you.
Between you, you might decide that those requested changes are realistic. In this case, your IP can make changes to your IVA Proposal and see if your lenders will accept the new version.
If you don't think you can accept those changes, you'll have to talk to your IP about your other options. Bankruptcy might be a better option, for example, or you might be better off entering a debt management plan.
Will my lenders accept my IVA Proposal?
That depends. They'll have to be convinced that your IVA Proposal really is the best way for you to repay your debts.
If they don't accept it - and there's no way to change it so it 'works' for both you and them - your IVA won't be able to go ahead.
Having said that, IPs are experienced professionals: they know what lenders tend to look for in an IVA and they won't even send an IVA Proposal to your lenders if they know it's simply not realistic.
It's good to know:
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Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on completion of an IVA, alternative solutions may be offered. If your IVA fails, it could lead to Bankruptcy. Your ability to obtain credit will be affected for at least 6 years. Homeowners may be required to release the equity in their property.