An IVA is a legally binding debt solution that looks to protect the interests of both you (the debtor) and your creditors. Due to the nature of an IVA, there is a defined procedure that every IVA application must follow.
The Right Debt solution
Although you might think an IVA might be the right debt solution for you, it is still recommended that you seek free debt advice from our experts. Debt solutions have their own criteria and while you can check for yourself whether you qualify, certain solutions might be better suited than others for your circumstances.
The role of the Insolvency Practitioner (IP)
If an IVA is the right solution for you, the first step is to find an Insolvency Practitioner (IP). An IP is a qualified professional, authorized by a regulated professional body, to advise on and oversee formal debt solutions. Your IP will look at your finances and work out whether an IVA is likely to be approved. They will go through your income and expenditure and work out how much you can reasonably afford to offer your creditors. Your IP will then make a suggestion for your proposal and discuss what an IVA will mean for your home and assets. If you have any questions or concerns your IP will be available to provide you with the information you need.
The IVA Budget
Your proposal will be based on your monthly income and your necessary living expenses. Your budget will be decided based on what money you have left after your living costs have been deducted. Your budget doesn’t just take into account household bills, rent and food – it will also consider clothing, toiletries, travel, school expenses and childcare to name just some examples. An IVA is designed to help you get out of debt so while you will have to make cutbacks on luxuries you won’t have to struggle financially – you can still live comfortably while repaying your debts. Each year your income and expenditure will be reviewed to ensure you are still paying the correct amount – if you can afford to increase your payments you will be asked to do so.
The IVA Creditor’s Meeting
Once your IP has submitted your proposal, it is then a case of waiting for your creditors to come to an agreement. At least 75% in value of the creditors who vote on your IVA must be in your favor for it to be approved. Therefore, the creditors you owe the most money to will have the biggest say.