You have finally decided to opt for an I-V-A or an Individual Voluntary Arrangement. However, you already have creditors or lenders waiting impatiently for their money. You are wondering how the I-V-A process works and just how soon you will be clear of your debt.
The I-V-A Process
The I-V-A process consists of six steps and it usually takes about six weeks to complete. Other factors may also lengthen or shorten the IVA process and we recommend you follow the instructions given by your insolvency expert. Nonetheless, here is a quick step-by-step guide to what you can expect when you apply for an I-V-A
Step # 1 — Talk to an insolvency expert
An insolvency expert is the first person you have to consult. An insolvency expert will assess your personal financial situation and evaluate whether you are eligible for the I-V-A. The adviser will assess your income, monthly expenses, debts, assets, secured loans, and other factors. The adviser will also discuss your options with you and let you know about other options like declaring a bankruptcy, the pros and cons of each option, your outstanding loan amounts, etc.
Step # 2 — Eligible for an I-V-A
Once the expert decides that you are eligible for an IVA, he will then draft a Statement of Affairs. The SOA is a consolidated document that contains detailed information about your current financial condition, your outstanding loans, and any income that you have at present. This document also serves as a plan for your insolvency agreement. As the SOA contains your income and your loans, it helps the lenders and the insolvency expert plan a repayment process and repayment amount that you can afford. The insolvency expert will act as the nominee or the person controlling the agreement and negotiating with the creditors. At this stage, your nominee or the insolvency practitioner may also apply for an interim order, which will stop any legal proceedings and recovery procedures that are being set up by creditors. This interim order will prevent creditors from contacting you until your IVA is settled or cancelled.
Step # 3 — Agreeing on the terms
Creditors have to agree to the terms set forward in the I-V-A agreement as per the insolvency art 1986. The SOA is usually circulated at the local County Court and the Insolvency Service. This will notify lenders that you are going for an IVA process and they will contact your nominee. The SOA will usually contain a date for a formal meeting with the lenders and this meeting is called the Meeting of Creditors. At this meeting, modifications to the repayment process, repayment period, and repayment amount may be requested by the creditors. In some cases, the lenders may contact the nominee before the meeting to negotiate terms. Lenders may also ask for a later meeting so that they can collect data.
Step # 4 — Signing the I-V-A
Once the IVA proposal has been set forward, creditors will come forward to negotiate their terms. A meeting may be set up with you, your creditors, and your insolvency expert. You should know that once the I-V-A is signed, all creditors have to abide by the clauses of the agreement. This includes creditors who have signed the agreement, who have not signed the agreement and those who did not attend the meeting.
Step # 5 – Notification
Once the agreement is set up, all parties are informed of the I-V-A and a Supervisor is appointed to ensure that you follow the terms of the agreement.
Step # 6 — Terms
As long as you follow the terms of the settlement, the I-V-A will remain in force. However, in case you default again; creditors have the option to approach the courts and recover their dues. You may have to file for bankruptcy as well.
Although these few steps cover everything involved in the IVA process, we do recommend you contact a financial expert as soon as possible. Creditors are willing to work with borrowers to simplify the lending process. If you cannot pay off your loans, get in touch with an expert and set up an IVA as soon as possible. It is your best option for getting out of debt quickly.