The process you have to undertake to start an IVA requires a number of steps. Once these are successfully completed you will be free of your unsecured debt.
- Prepare your financial statement
- Proposal written by IP
- Creditor’s Meeting held and IVA agreed
- Payments made in accordance to the agreement
- IVA completed and debt written off
1. Prepare your Financial Statement
One of the first steps you need to undertake to start an IVA is prepare your financial statement. This will form the foundation of your application. As such it is very important that it is done correctly.
The statement must include some key information. Firstly you will need a list of all your unsecured debts. You will also need to include details of any significant assets you own such as your car and property.
Your income must also be given including your wages, benefits and any other money you receive. Lastly you need to provide a list of your living expenses. It is vital to get this right as it will be used to calculate what you can pay into your IVA each month.
You should prepare your Financial Statement with the help of an experienced debt advisor. Speak to us to get assistance with this.
2. IVA Proposal written by an Insolvency Practitioner
You cannot set up an IVA yourself. You need to use an Insolvency Practitioner (IP). This person is licensed to negotiate the Arrangement on your behalf and manage it once in place.
Your IP will review your financial statement and confirm how much you will will be required to pay towards your debts. They will then write a formal proposal on your behalf.
Your IVA Proposal is a very important document. It states how much you intend to pay back to your creditors and any other obligations that are required of you. You will be asked to sign it to confirm you agree so it is important to read it carefully.
There are many IPs throughout England and Wales. Speak to us and we will match you with an IP who is best suited to help with your specific situation.
3. Creditor’s Meeting held and IVA Agreed
You creditors must agree to your IVA before it becomes legally binding. Your IP will send a copy of your signed proposal to each of them. They are then given 2 weeks to review it and decide whether to accept it.
At the end of this period a Creditors Meeting is held. This is an opportunity for your creditors to get round the table, discuss your proposal and accept it.
Some of your creditors may reject your offer. However as long as 75% by value of those who respond say yes then the Arrangement is accepted and legally binding on them all.
You are not required to go to the creditor’s meeting. In fact it is unlikely that any of your creditors will attend either.
4. Pay your IVA in accordance to the Agreement
Once your IVA is accepted you must start making your payments. If you are paying monthly your first payment will normally be on the first day of the month after the Arrangement is agreed.
It is important to understand that the payments you make will not necessarily remain fixed. If your personal circumstances change they could go up or down.
If you are a home owner you will have to try and release equity in the 5th year of the Arrangement. If this is not possible the number payments you have to make is likely to increase by 12.
If your situation improves during an IVA your payments may increase. Likewise if your finances deteriorate they could reduce.
5. IVA Completed and Debt Written Off
Once you have made made your final payment and complied with any other requirements your IVA will be almost finished. However it is not over just yet. First you must be issued with a Completion Certificate.
Your IP should send you this document within 2-3 months of your final payment. It confirms that you have met all your obligations and the Arrangement is finally over.
Once your Certificate has been issued any debt included in the arrangement that you were unable to pay is written off. You can then move on with your life debt free.
Until your Completion Cetificate has been issued your IVA is not over. Even if your final payment has been made you still have to hand over any windfalls until this document is received.