One of the key stages of the IVA application process is writing your IVA Proposal. Your Insolvency Practitioner will do this on your behalf.
- What is an IVA Proposal
- Who writes the document?
- What information is included?
- Information to check before you sign
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What is an IVA Proposal?
Before an IVA can be put place you have to make a formal offer of repayment to your creditors. This is known as your IVA Proposal.
It is a document that describes exactly how much you intend to repay during the course of the Arrangement and how the money will be distributed. After it is prepared a copy is sent to each creditor for their review.
The proposal also gives a comparison between what your creditors are likely to receive if they agree compared to what they would get if you went Bankrupt. It highlights that agreeing to the IVA is the best option for them financially.
If your IVA is not accepted you are not forced to go Bankrupt. The bankruptcy comparison is simply there to show your creditors how much better off they will be compared to if you decided to go bankupt.
Who writes the Document?
You are not responsible for writing your own IVA proposal. This is the job of your Insolvency Practitioner (IP). Generally speaking they will use a standard format known as the Protocol.
Once the document is drafted you will be sent a copy to review. It is important that you read everything through carefully including the all the terms and conditions.
You should not have to pay anything to your IP up front for writing your IVA Proposal. Once the Arrangement is agreed they receive a Nominee Fee for this work which comes out of your standard monthly payments.
Be wary of any IVA Company that asks you to pay a fee up front before your IVA is accepted. Reputable IPs do not require this.
What Information is included in your IVA Proposal?
Your IVA Proposal will include details of your financial circumstances. You have to submit information about your income and household living expenses budget. Also any significant assets you own such as your home and car.
This information is required to show your creditors that you are offering to pay them as much as you can afford during the Arrangement.
In addition a list of the creditors that you are including together with the amount they are owed is added. This gives them all the opportunity to understand that they are being treated equally.
Information about the fees that your IP will charge and the general terms and conditions of the agreement are also included in the IVA Proposal.
Information to Check before you sign your IVA Proposal
Once your IVA proposal is written your IP will send you a copy in the post to review and sign. Before you sign you should make sure that you read through the document very carefully.
It is important that you read and understand all the detailed terms and conditions. In particular these will dictate what happens if your circumstances change or your obligations are if you are a home owner.
If you are concerned about anything or do not fully understand anything written in the Proposal ask your IVA Company to clarify these. Do not sign and return the document before you are 100% happy with the contents.
If you do not agree with anything in your IVA Proposal or are not confident that you will be able to sustain the proposed payments do not sign it. Ask your IVA Company whether these can be changed. If not you must seriously think about whether this is the right debt solution for you.