If you are struggling with personal debts we consider the steps you will need to go through to get an Individual Voluntary Arrangement.

A popular way to resolve a personal debt problem is to implement an individual voluntary arrangement (IVA).

The reason why individual voluntary arrangements are popular debt management solutions is that they have significant advantages. Once implemented all additional interest and charges are frozen and it is likely that by doing an IVA, you will be able to write off a significant amount of your debt.

However IVAs are formal legally binding agreements. Before you can start an IVA you must go through a number of important steps which will help you understand whether an IVA is for you or not.

Step 1 – Decide if an IVA is right for you

Before you decide to start an IVA it is important that you understand all of the implications and whether the solution is the right one for you.

The best way to do this is first start researching about individual voluntary arrangements on the internet. Internet research will give you a good understanding of how an IVA works and the advantages and disadvantages you can expect.

It is also sensible to read some IVA forums and learn from the experience of others who have gone through the IVA process.

Having done your initial research you should then get IVA advice from an experienced debt advisor who will be able to discuss your circumstances with you and answer all your questions.
 
In order to actually propose your IVA to your creditors you will need to use a professional person called an Insolvency Practitioner (IP). The debt advisor you speak to will be able to recommend an insolvency practitioner to you.

Step 2 – Produce your statement of affairs

Having decided that an individual voluntary arrangement is right for you, the next step is to record all of the information about your financial circumstances in a statement of affairs document.

Your statement of affairs will contain information about four key areas. Your income, your living expenditure, your debts and your assets (particularly your home and car).

You should take time to make sure that the information in your statement of affairs is correct. Particularly that you have not missed any of your debts out and that your living expenditure information is correct.

Your income and IVA living expenditure budget will form the basis of the decision about how much you should pay into your IVA each month. As such it is very important to get these figures right.

Your debt advisor will help you with your IVA living expenditure budget. However it will also be useful to look at a living expenditure guide to make sure that you do not overlook any of the expenditure categories that you need.

Step 3 - Submit paperwork

Once your statement of affairs is complete, it can be used as the basis for producing your IVA proposal.

The IVA proposal is a formal legal document which will detail all the information about your circumstances and how much you are proposing to pay back to your creditors in your IVA.

However before the proposal can be produced, you will need to submit documentary evidence of all the financial details you have given in your statement of affairs.

The documents you will need to produce will include statements and balances of all your debts to prove what you owe. Also copies of wage slips or past business accounts to prove your income, and bank statements to prove your expenditure.

Most importantly if you are a home owner you will normally need to get a valuation of your property to prove what it worth. Your debt advisor while help explain the best way to get this.

It is unlikely that your IVA proposal can be produced without your insolvency practitioner being in receipt of all of this paperwork.

Step 4 – The creditor Meeting

When your IVA proposal has been written it will be sent to you for signing. You need to sign and return the document to your insolvency practitioner. Once this has been done, a date will be set for a creditors meeting.

In theory the creditors meeting is an opportunity for all of your creditors to sit around a table and discuss your IVA proposal and review it.

However in reality your creditors will normally not attend the meeting. They are likely to simply write a letter to your IP stating that they accept your IVA.

If they do not accept the proposal, it is unlikely that they will reject it off hand. They are more likely to propose modifications which you would then have to discuss with your IP.

Ultimately if you do not agree to the modifications and no compromise can be reached, you can still pull out of the IVA and decide to choose a different debt management solution even at this late stage.

Step 5 – IVA accepted

As long as 75% of the value of creditors who vote on the proposal say yes, then it is formally agreed and legally binding on all of the listed creditors.

It is never possible to say with 100% certainty that an IVA will be accepted before the creditor’s meeting. However your IP will be 99% certain or they will generally not agree to submit your proposal.

Once your IVA has been accepted, then it is legally binding on both you and all of your creditors.

From that time on you are obliged to stick to the agreement. As long as you fulfil your obligations once your IVA is completed, any remaining debt will be written off and you will be debt free.

From all of the steps outlined above, you can see that there is a lot of work to be done in order to get an IVA.

It will normally take 6 – 8 weeks to get your IVA in place. These timescales could be reduced. However this will be very much dependent on how quickly you are able to produce your required paperwork.

Related IVA articles

If you are interested in reading more news and expert articles about IVAs, please click on the following link:

http://www.beatmydebt.com/forum/viewforum.php?f=50

What to do next

If you are struggling with debt and are considering an IVA, visit www.beatmydebt.com

Our experts are available to speak to you about the IVA problem and offer further help and advice.

Our vibrant debt forum gives free access to experienced industry experts and others who have suffered with debt problems and have been through the IVA process themselves.

Useful guides, calculators and information are also available designed to help you understand how to manage and resolve debt problems.

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