How long does it take for an IVA to be set up?

iva costs

This page will let you know How long does it take for an IVA to be set up requires and how it is set up. When you apply for an IVA, you should determine whether getting an IVA is a good debt solution for you or whether your creditors are okay with an Individual Voluntary Arrangement (IVA). Because once you apply for an IVA, the following process will be initiated as soon as possible. That’s why you should request IVA advice

Before the IVA setup, the Insolvency Practitioner (IP) or trustee should explain all the viable debt solutions that might fit you to not end up with the wrong choice. You should ensure to seek IVA advice and know what is right. But, if you anyway choose IVA to handle your debt issues, you can find out about the entire IVA setup process right ahead. 

The general duration for IVA setup is between four weeks to six weeks from when you apply for an IVA. It also depends on how quickly you deliver all the essential documents. Then the later paperwork is all upon the trustee and the IVA Supervisor. The overall IVA process can be separated into several stages. So, let’s have a look at them. 

The various stages for IVA set up involve: 

First meeting with the Insolvency Practitioner (IP)

The IVA setup process begins when you apply for an IVA. The first stage involves you (the debtor) meeting the IP to initiate the IVA setup process. If a personal meeting is not viable, the session can also be conducted over other modes like telephone or video calls. The meeting mode also depends on your IVA proposal’s complexity and financial circumstances. 

creating iva proposal

Via the meeting, your IP will make sure that you understand the requirements of the IVA process and other IVA-related consequences. To put it simply, the IP provides you with necessary IVA advice before IVA setup. While the IP will let you know about various advantages and disadvantages of entering into IVA, good IVA advice and information will be provided. The IVA advice focuses on your personal and financial situations, considering your assets and other affected third parties, if any.

The Individual Voluntary Arrangement (IVA) proposal

When you apply for an IVA, you must create an IVA proposal. The IVA proposal outlines the terms and conditions of the Individual Voluntary Arrangement between you and your creditors. This proposal acts as the basis of the deal you offer to the creditors. Provided IVA advice is also helpful in preparing the IVA proposal. 

The IVA proposal presented by the debtor to the creditors usually contains information about,

  • Debtor’s background
  • Debtor’s financial history 
  • If the debtor is insolvent, why?
  • Attempts to solve the economic challenges by the debtor, if any.
  • Why IVA is a better debt solution than bankruptcy for the debtor by showing budgeted outcomes.
  • Debtor’s statement of affairs and cash flow projections, if any.

When applying for an IVA, all the necessary information and documents must be well-prepared. Only then can the IVA setup can be processed. 

The Trustee or Nominee

The Insolvency Practitioner (IP) acts as the Trustee or Nominee on the debtor’s behalf. The Nominee has to meet the creditors and present the IVA proposal’s content. The Nominee has to consider and report directly to the creditors even if;

  • The IVA proposal is somewhat unfair or not.
  • The debtor’s financial condition is materially different from the IVA proposal shown and verified.
  • Even if the IVA proposal has chances of failure, the Nominee has to put forward a reasonable prospect of its approval and IVA setup. 

Obtain an Interim Order

After meeting with the creditors and presenting the IVA proposal of the debtor, the IP process to acquire an interim order from the court, an interim order acts in favor of the debtor to prevent the creditors from taking extra action to get back their money. While the IVA setup is underway, an initial moratorium period is implemented. This provides the debtor protection and space from unwanted harassment from the creditors. If there is any, IVA advice will come in handy. Anyhow, an interim order is not a necessary element in every IVA setup. 

The interim order from the court can be obtained in the submission of:

  • The IVA proposal
  • An IVA proposal notice signed by the debtor and Nominee.
  • The interim order application along with the witness statement. 

Creditors meeting

A creditors’ meeting is convened during the IVA setup process to acknowledge whether they agree or disagree with the IVA proposal. They are given a proxy form to vote their claims. If more than 75% of the creditors favor the IVA proposal, the court will accept it. If the creditors propose any modifications to the IVA proposal’s terms, a period of 14 days at most is granted. During this period, the debtor and the Nominee can decide to accept or not accept the creditors’ term. 

If by any chance, the IVA proposal is rejected, the debtor can look for IVA advice and choose other debt solutions. 

IVA implementation

When you apply for an IVA, the process for IVA setup begins. Various instances occur during the process lasting for not more than six weeks. Finally, when the court accepts the IVA proposal, the IVA Supervisor reports the creditors of the same. 

After all the involved parties are notified, the Supervisor must ensure that the terms and conditions of the IVA proposal are followed accordingly. There will be a client account of the debtor and the creditor where the Supervisor will monitor the regular contributions paid and received consequently. The Supervisor will also take notice of every change in the debtor’s financial situation. An annual review is also carried out to prepare a progress report. 

Once the IVA setup is complete, it will immediately come into effect till the payments are over. after the IVA payments are successfully over, the debtor will be discharged from the IVA. 

As you can see, the stages mentioned above are a part of the IVA setup process, which usually takes up to four to six weeks.