How The IVA (Individual Voluntary Arrangement) Process Works
The main benefit of an IVA is that an agreed portion (up to 75%) of your total debt is usually written off at the end of the agreement. Also, your professional status will not be affected and details will not be made public (as happens in bankruptcy cases). The requirements for proceeding with this course of action are as follows…
- At least $30,000 of unsecured debt
- Cannot afford debt repayments as they are
- Able to pay at least $300 per month towards an IVA
You should contact an IVA practitioner if you think that an IVA is the best way to proceed with dealing with your debt problems. The sooner you do this, the better, as they will be able to apply for an interim order which prevents any bankruptcy petitions being filed against you whilst the IVA is under consideration.
The insolvency practitioner presents details of your IVA proposal to the court and asks for a creditors meeting to be called to consider the proposal. If the court thinks that your proposal is viable, then details of the meeting are sent to each of your creditors. Do not withhold details on any of your creditors as only those that the court are told about will be bound by the IVA. Any you miss out can still take full legal action against you even if your IVA proposal is accepted and you adhere to the terms of it.
Your creditors will vote to accept or reject the IVA proposal at the meeting. If over 75% of your creditors (with votes weighted in favor of those who you owe most money to) decide to accept the IVA then it comes in to force. It then becomes binding on all creditors who had notice of the meeting, even if they did not attend. You will then work with your IVA practitioner to see out the terms of the agreement. At the end of the agreed period, if you have fully adhered to the terms of the IVA, you will be debt free. Your creditors can no longer pursue you under any circumstances.
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