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IVA: Individual Voluntary Arrangement.

IVA debt solution is a formal agreement between you and the people you owe money to, your creditors, to arrange to pay a percentage of the money you owe them at a reduced monthly amount for about 5 years. Once you have paid your IVA debt solution for the agreed period the debt is then considered settled. An IVA debt solution has to be arranged by an Insolvency Practioner because of its formal nature.

What is the purpose of an IVA debt solution ?
Whwn you arrange an IVA debt solution with an Insolvency Practioner it becomes a legally binding agreement between you and the people you owe money to.IVA debt solution will help you if you are in finacial trouble with mounting debts.

IVA debt solution Arrangements?
IVA debt solution is based on your monthly affordable disposable income. When you have made the final payment on your IVA debt solution, any outstanding debt is legally written off. The IVA debt solution can write off up to 75% of your debts (subject to your current fiancial situation ).
How does an IVA debt solution work?
An IVA debt solution works by settling your debts within a fixed period of time which is normally 5 years. No interest or debt charges will be added by your creditors and they are not allowed to make demands for additional payments.

Once a decision has been made that an IVA debt solution is right for you, you will be asked questions regarding your current financial circumstances. A repayment amount for your IVA debt solution will then be agreed. Once the IVA debt solution proposal has been drawn up you will need to check and sign the IVA debt solution and return them to your Insolvency Practioner

An application may then be made to the court for an Interim Order. Once this is in place, no creditors will be able to take legal action against you. You may be asked to attend your creditors meeting but this rarely happens, normally you are asked to be contactable by phone on the day.

For an IVA debt solution to be approved, creditors will be called upon to vote either for or against the IVA debt solution. If only one creditor votes "for" the IVA debt solution, the IVA debt solution will be approved. However, if only one creditor votes against the IVA debt solution and they represent less than 25% of your total debt, the meeting will be suspended for a later date and other creditors who did not vote will be called upon for their vote.

If the creditor who voted against the IVA debt solution represents more than 25% of the total debt you owe the IVA debt solution will fail. This is because an IVA debt solution will only ever be approved if 75% in monetary value is voted for. If any of the creditors don't vote, it is assumed that they will vote FOR the IVA debt solution.

The IVA debt solution will be legally binding. As long as you keep up the repayments, when the term of your agreement is finished, you will be free from these debts regardless of how much has been paid off.

During the period of your arrangement your financial situation will be reviewed regularly to see if there has been any change in your circumstances.

It is very important that consumers do not confuse an IVA debt solution with a Debt Management Plan, which are not legally binding.

Most IVA debt solution cases are based around one, affordable, monthly, payment, over a period of 60 months. This one affordable payment is based on your earnings minus your expenses.

An IVA debt solution proposal has to be prepared by a licensed Insolvency Practitioner (IP) who then presents it to creditors at a creditors meeting.

In the case of a consumer IVA debt solution it is unusual for any creditors or their representatives to attend the creditors meeting as most prefer to vote by fax or by post.

The rules of an IVA debt solution state that providing 75% (in value terms) of those that have voted, vote to accept the proposals (with or without modifications) then the IVA debt solution is agreed and becomes legally binding on all other parties whether they voted or not.

When an IVA debt solution is accepted the IP's role becomes that of supervisor, monitoring the Individual IVA debt solution progress and ensuring that the terms and conditions that were agreed to at the creditors meeting are properly adhered to.

It is the debtor's responsibility to pay the agreed payments to the IP who will then ensure that these payments are distributed to all creditors on a pro-rata basis in accordance with terms and until the successful completion of the IVA debt solution. It is in the debtors own interest to maintain their payments as failure to pay will almost certainly result in the failure of the IVA debt solution.

Upon the successful completion of the IVA debt solution the debtor will be considered debt free even though they may not have actually paid off all of their debts in full. Any outstanding balances are written off (known as a composition of debts) and the debtor is then free to make a fresh financial start.

It is worth noting that if you do enter into an IVA debt solution with your creditors and you have an endowment policy linked to your mortgage then you may be expected to cash it in and pay the proceeds into the arrangement. Likewise, if your property has a reasonable amount of equity then it is likely that a some of it will have to be released at sometime during the arrangement (usually the end), so it can be paid to creditors. Drastic as this may sound it can be a deciding factor in whether an IVA debt solution is approved by creditors and a realistic way in which a debtor can retain their property