IVA Processes — Is it the Right Debt Solution?


According to the 1986 Insolvency Act, the IVA is generally known as the formal debt solution. The main intention of the IVA is very simple, it helps the people who have debts and want to pay back by safeguarding their assets. Moreover, IVA also helps people to protect their status and reputation. 

To understand the details of the debt arrangement, you need to know more about the IVA process. The process actually means how the IVA works. In addition to that, you need to know about the possible impact upon your credit report. 

IVA Process: Is it Suitable for You? 

The IVA is the legal collaboration between you and the money lenders to pay off all the unsecured debts. When you are unable to pay the money to the lenders according to their terms and conditions, you pick up this debt management scheme to bring a halt to the payment process. 

On agreeing with the IVA, a certain amount of monthly payment should be given to the creditors. Considering all the factors of the United Kingdom’s credit culture, IVA is reflected as positive feedback from most of all the people. 

Qualifying for the IVA Process – How does the IVA process work?

IVA is not for everyone. To qualify for it, one must fulfill all the eligibility criteria. After applying for the IVA, its initiation will depend on the decisions of the creditors. Most of the creditors must agree with it. On the other hand, the IVA process will start when the amount of debt is large enough. Otherwise, the moneylender will not agree with your decision. 

Now, coming to the creditors, the number should be more than two. Furthermore, your employment status also plays a vital role in the qualification process. More terms and conditions can also emerge when you are having a business of your own. 

IVA and DMP: Clear your Confusion 

There are a few people who mix up IVA and DMP. The DMP stands for Debt Management Plan. IVA is itself an agreement which helps in managing the debts. That is why the IVA is the DMP that the people can easily afford. Apart from the IVA, all the other plans might be informal in nature that doesn’t have the ability to help people just as the IVA does. 

Don’t get confused with IVA and Bankruptcy?

If you become bankrupt, then every other way the situation left at hand is applying for the IVA. You might call it a good alternative to bankruptcy. People like directors of certain organizations, policemen, officers who supervise a prison, lawyers, army officers, and others go for the IVA. They do it for the sake of their reputation in society. Hopefully, you will never be confused with the IVA and Bankruptcy. 

What are the Benefits of the IVA process?

Learning about the benefits will help you to better understand the benefits of the IVA. The creditors will never be able to charge interests or extra amount of money while the IVA is active. Facing the creditors are also easily avoidable, as all the work will be done by the Insolvency Practitioner. When the IVA is complete, you will be free from all types of outstanding debts, once and for all. 

What is Full and Final Settlement?

The payment of the last year is generally called the Full and Final settlement. Generally, the total lifespan of the IVA is five years. In case of any critical situation, it might extend a year more, but not greater than that. In the IVA process, the full and final settlement has all the added benefits that you can get with the IVA. Once the plan is activated, the creditors have to agree with it, no matter what. 

The IVA Process: Complete Guide

First, the monthly payment is decided by calculating the total amount of debts. After that, certain procedures are followed. Let’s check them without further ado. 

Bring a Nominee

The nominee is the person who takes the charge of managing the IVA for you. That particular person is called the IVA nominee. On the other hand, all the legal and important documents are basically prepared by the person who is known as the IVA drafter. The drafter will work under the supervision of the Insolvency Practitioner (IP). 

Note down and make a list of your assets, income, expenditure and others as soon as possible. After that, hand it over to the IP. If your assets have the equity value, then do mention it in the IVA proposal. After going thoroughly through all the papers, if the nominee is satisfied with it, he/she will send the documents to the IVA personnel. 

The Order of Interim

Who can say, the creditors might make an attempt to file any legal actions against you. In this type of cases, the nominee or the IP will play an important role. He/she will prepare the order of interim, which will act as a shield to protect you from being taken to the court for any reason. Moreover, the IP will arrange a meeting with the creditors and find out a solution for you.  

Arranging a Meeting 

The meeting among the creditors and your IP, on your behalf. Before the meeting takes place, ask your IP to send a notice regarding that. The time span must be 17 days before the meeting is to be held. You may or may not be present at the meeting. Your presence is not at all mandatory. 

The Voting Poll 

According to the rules, all the creditors must agree with your proposal. That is why they have to vote. The voting will bring out the ultimate result of the selected number of creditors those who are in your favour of having an IVA. Your IVA will only be active when most of the creditors are on your side. Otherwise, your proposal of opting for the IVA will get rejected at once. 

The Modifications 

In the ongoing IVA process, the terms and conditions are very much necessary, they are known as the IVA modifications. Your hired Insolvency Practitioner will deal with all the modifications. Before the IVA starts, make sure that the modifications must be done at the time of the meeting. If you are not comfortable with the terms, you can instantly reject the modifications then and there. However, it might result in the rejection of the IVA. 

Accepting the IVA

The acceptance of the IVA occurs when most of the creditors accept your terms and conditions. Those who haven’t agreed to it will have to give a positive aspect by obeying all the fellow creditors. After that, the IVA register will come into the picture, which will remain active based on the terms. 

The Emergence of the Supervisor

Any personnel who belongs to the IVA organization will play the role of the supervisor. If he/she is unavailable, your IP must pick up the role. Following the Pro-rata basis, you have to make the payments to the creditors. Now, the payment will completely depend on you along with the guidance of the IP.