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IVA Proceedings: Basic Steps for a Successful Insolvency Set-Up

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Individual Voluntary Arrangement is one of the popular debt insolvency practices in the United Kingdom. It would relieve you from the never-ending loop of debt, if you commit with a consistent repayment plan towards the creditor, with the IVA arranging organization. This is a legal contract between you and the creditor with the assistance of a third-party debt advisory service. Do you know how to apply for an IVA?

An IVA would work for you if you owe more than £5000, and if you qualify for the other criteria set for how an Individual Voluntary Arrangement is set up. Well, IVA is for the residents of England, Northern Ireland and Wales; and, it doesn’t apply to the citizens of Scotland. 

However, if you’re confused about how to apply for an IVA, then let’s take you to the core set-up of IVA proceedings.

How does an IVA affect divorce proceedings

If you have entered into an IVA as a homeowner, the affect of a divorce may depend on the equity you have in your home.

If you have little or no equity, then there may be no issue with a divorce settlement or separation agreement allowing one party to live in the home.

However,  if there is equity in the home, it is more likely to cause a problem. It may be difficult to  remortgage allowing you to release the equity.

If you decide to sell the home, then any equity will likely be paid into the joint IVA . This may cause problems between the parties to the divorce in agreeing the sale of the home.

Furthermore the costs of renting property as well as making IVA payments can be difficult to maintain.  After separation there will be two sets of rental payments and bills, which may mean that the initial proposed IVA payments are unaffordable..

Is IVA Suitable for You?

The query is literally the first step to apply for an IVA. Make sure that you are eligible enough before you make a committed application for a longer repayment option. Ask your Insolvency Practitioner whether IVA is the right debt insolvency practice among all the available ones.

Urging to the Court for Intermediate Order

People tend to apply for an IVA when the creditors start chasing after you for the money you owe. If you find the repayments tougher and your earnings are not that significant, then the creditor might grant you an IVA practice. 

But first thing first, you have to get the court order in order to stop the harassment from the creditor. Therefore, the IVA service advisor should arrange an interim order. And, the creditors can’t take any legal action against you.

Deciding the Repayment Amounts and Terms

The Insolvency Practitioner that you have appointed would go through the steps on how an Individual Voluntary Arrangement is set up in your favor. That’s why they count in your financial situation and spare your properties, assets, and other factors. 

The inclusion of such factors might increase the repayment installments. The professionals would craft you a non-stressing payment option for a monthly basis that you can afford without any seam. However, you have to be quite practical to apply for an IVA. Otherwise, the creditor won’t settle for a minimum amount, that lies lower than what you can afford.

Crafting the IVA Proposal

The Insolvency Practitioner would draft a contract including the pay-off installment, the time period, and other essentials to convince the creditors and the court. Usually, paying off the debt with the help of IVA takes five to six years, maximum. 

Additionally, the IP would include why you’re unable to pay off the debt fully and why you’re going to apply for an IVA. The proposal would carry the following statements:

  • The financial figures of your assets, earnings and the debt you owe from the creditor.
  • Your intended amount of paying back to the creditor and the settlement period.
  • Why you applied for an IVA and the consequences can include bankruptcy if you don’t go for IVA.

The Insolvency Practitioner would mention the IVA amount regarding your financial situation. And, experienced Insolvency Practitioners are most likely to convince the creditors, and the results will be in your favor. 

Would Creditors Listen to your IVA Proceedings Application?

This is the most crucial step to the process of how an Individual Voluntary Arrangement is set up. Your creditors would call for a meeting at the IP’s office and decide whether you’re eligible for getting a chance through IVA. 

You have to represent yourself and your conditions either in person or through telephonic conversations. In case, the creditors pose no objection to the IVA proposal, then you are all set to pay off the debt with IVA. Every status of your IVA application and agreement should be reported to the court. Make sure that you abide by every rule or regulation while you are confined within an IVA contract.

Pros & Cons of an IVA

Apart from the IVA Proceedings process, one must be aware of the consequences of IVA. It includes both potential benefits and risks for an individual dealing with debt. Here goes the list of advantages:

  • IVA would complete within five to six years if you regularly pay off the in-contract installment.
  • You can go for either lump sum IVA or monthly schemes. 
  • Moreover, you need not fret about your home, if you are consistent with the repayments.
  • You’re done with the final payment and you will get rid of all your unsecured debt.

And, the associated disadvantages of an IVA Proceedings are:

  • If the IVA fails, then it can result in bankruptcy.
  • The public register would include your IVA record.
  • In case, you owe a debt regarding the mortgage regarding your home, then you need to go for re-mortgage plans.
  • Lack of re-mortgage might penalize you with an extra payment scheme for another twelve months.
  • Finally, it won’t spare your credit rating.

Wrapping up…

Should you apply for an IVA? Well, that relies on your monetary conditions, earnings and the amount of debt you owe. Therefore, IVA Proceedings  consult your financial affairs with a financial advisor or an Insolvency Practitioner for the best insolvency practice. The good news is that there is a high chance of success with an National Debtline IVA proposal when you engage a veteran and certified Insolvency Practitioner organization.

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