An IVA is set up through four main steps. However, before you start the process your chosen insolvency practitioner should explain what to expect at each stage and what timescales might be involved. Of course, should you have any specific concerns along the way then its important to speak with your advisor since, once entered into, an IVA is legally binding on all concerned.
Step One: Once you’ve taken the decision to go ahead with an IVA your insolvency practitioner may apply to the Court for an ‘interim order’. This basically prevents your creditors from taking any further action against you whilst the IVA is being put into place. Make sure you get the best IVA company for your needs. Many find this a huge relief in itself since it means that creditors can no longer contact you by phone, correspondence or through home visits – all of which can naturally be very stressful.
In the alternative, your insolvency practitioner may help you to adjourn any pending Court action – it very much depends on your individual circumstances and what action (if any) your creditors have already taken against you.
Step Two: As soon as possible your advisor will want full disclosure of your income and outgoings, together with details of your debts. Prior to meeting with your advisor you might be advised to put pen to paper and draw up a list of exactly what is owed and to whom. This will help your advisor consider your different debt types (i.e. priority and non-priority debts) whilst also taking any possessions into account – such as property, vehicles and so on. For example, if you need a vehicle to get to your place of employment then you might be able to exclude it from the IVA. If, on the other hand, you own a property with substantial equity in it then it may have to be included with a view to it being re-mortgaged during the last year of your IVA. Again, much depends on your individual circumstances but your advisor will be able to provide you with more bespoke advice on this aspect of the IVA.
Step Three: Once your advisor has calculated an affordable amount for you to repay each month he or she will then draw up a formal proposal for onward submission to your creditors. A report will also be drafted for the Court and together this will include:
- A full financial statement of your income, assets and debts
- A proposal setting out more specific terms of the IVA – for example, it’s intended duration
- Reasons why your creditors should agree to the proposal.
Step Four: Your insolvency practitioner will then call a creditors’ meeting, which you’ll be advised to attend in case there are any specific questions to be answered. This meeting is usually held at the offices of your insolvency practitioner and not in a formal Court room. Consequently it can provide a good opportunity to engage positively with your creditors in the hope that they’ll agree to your proposal going forward.
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