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What is an IVA proposal?

When setting up an IVA (Individual Voluntary Arrangement), your Insolvency Practitioner (IP) - the professional responsible for helping you set up and complete your IVA - will draw up an IVA 'proposal' with you.

An IVA proposal is basically a document showing your lenders why an IVA would be a suitable way of repaying what you can afford towards your problem debts.

The proposal will be designed to take both your interests and those of your lenders into account. It will detail the proposed terms of your IVA, so your lenders can decide whether or not it's the best way of getting back a fair proportion of what you owe them in total.

You can apply for an IVA on this page.

What information will an IVA proposal include?

An IVA proposal will show your lenders how you and your IP believe your IVA should work.

So it'll contain details of your debts, your income, your expenditure and your assets.

It'll set out how much each of your unsecured lenders will receive (which depends on how much you owe to each lender) and how much you'll be able to repay overall during the time for which the IVA will run (in most cases, five years).

Once you and your IP are happy with the terms, your IVA proposal will be sent to your unsecured lenders, who will then vote in a 'creditors meeting' on whether to accept your IVA. For your IVA to go ahead and become legally binding, lenders who account for 75% or more of the total debt must agree to the proposal.

Read more about IVAs here.

What happens if my lenders accept my IVA proposal?

If your IVA is accepted, you'll begin making the new, reduced payments outlined in your IVA proposal.

As long as you keep up with your payments, you'll prevent any further action from your unsecured lenders, and if you're a homeowner, you won't be at risk of losing your home (though you may have to release some equity, which will increase the size of your mortgage).

Once your IVA comes to a successful end, you'll be declared debt-free. (Bear in mind that this applies to your unsecured debts only.)

What happens if my lenders reject my IVA proposal?

If your lenders don't accept your IVA proposal, there are two courses of action you could take:

1.  Make the necessary changes to your IVA proposal and see if they'll accept it now

2.  Consider alternative solutions.

A professional debt adviser can give you some advice on the best approach to take.

By Daniel Culpan.

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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.