|
Frequently Asked
Questions on Individual Voluntary Arrangements
The debtor (that's you) is usually under extreme
cashflow pressure and cannot manage the problem. The debtor will be suffering
because of firefighting creditors. You have considered the IVA tool as
the best option, but read these FAQ's first to see if we can help you
to make a decision.
Individual Voluntary Arrangements FAQ's
Useful links for this page - A
Detailed Guide to IVA's
Question: What is an IVA really?
Think of it is a deal. Going bankrupt will often result in very little
return for your creditors. This is because the costs of bankruptcy and
the loss of value of your assets (if any) will lead to very low level
of money being generated for your creditors.
If you can freeze all unsecured debts and then offer
to pay a modest amount each month back to creditors doesn't it make sense
to use those profits to pay back something to the creditors? This is the
basis of an IVA it is a deal between you and creditors to repay back something
over time from your earnings or form the sale of assets and to ensure
that creditors' interests are maximised.
Question: What is needed to make an IVA work?
It may be necessary to make changes to the way you spend money but if
the IVA deal is sound and you are determined to make it work and succeed,
then an IVA can work. If however you DON’T have a steady income
or assets to dispose of, then you should consider other options such as
bankruptcy.
Question: Why have I not heard of IVA's?
Over 20,000 people enter IVA's each year. It is a well regarded, ethical
and moral way to deal with debt problems whilst avoiding bankruptcy. Also
it's not advertised and is discrete so most people are not aware that
an IVA is in place.
Question: Isn't bankruptcy a better option?
If you have no assets and lots of debt and you do not mind bankruptcy,
possibly. But the key test is - is the IVA viable? And are you determined?
If you answer no to either of these, then bankruptcy maybe the most sensible
option. Consider your
objectives and your
options first before making such a decision.
If you have any doubt as to your current position and
what you need to do, please do not hesitate to contact us by e-mail or
by our freephone number. Visit the guides to bankruptcy on this website.
Question: What are the benefits of an IVA?
See IVA guide for detailed discussion of this. In summary: it is a deal
that prevents creditors from taking legal or debt recovery action against
you. It allows structured repayment based on affordability. It can be
relatively cheap and it is a quick process. IVA's can give a breathing
space
Question: How much does it cost?
This is a very difficult one to answer because, of course, this varies
on a case-by-case basis. But the main areas of cost are the nominee’s
fee, court costs and the supervisor’s fee (see the detailed IVA
guide for more details. If you have any questions with regard to this
please speak to Debtless or an insolvency practitioner.
Question: How do I work out how much I can pay back to the creditors?
This is a very important question. It is vital to do a deal with creditors
that you can live with and achieve. There is no point in trying to repay
more than you can afford. In all cases you must talk to and work with
an advisor who can understand your position and one who understands the
IVA mechanism.
If you are speaking to such advisors or insolvency
practitioners ask them how they would determine the repayment level. If
they answer "you can write off most of your debts without worry"
then this is not a good answer and may mean the advisor is not an appropriate
person to deal with. If they say that "you should pay back as much
as possible in a short a term as possible" this may also be bad advice.
Ask yourself is this the right advisor to be working
with?
As a rule of thumb however, your own personal outgoings
must be exceeded over a significant period of the IVA period by your incomes.
This excess is used as the contribution to your creditors.
Question: Say I am two years into the IVA and my
income has changed significantly and I can't keep up payments any more.
What can I do?
This is a common question. It is rarely possible to forecast such things
accurately and the only thing that can be certain is that CHANGE is inevitable.
If the proposal is built round a deal where payments are much too high,
perhaps they were wrong in the first place, no matter, a revised deal
can sometimes be struck provided the reasons are sensible and creditors
agree. But, take care to offer to pay reasonable amounts in the first
instance.
Question: I have heard you can write off up to
95 per cent of your debts
This is not the aim of the Insolvency Act or the IVA mechanism. The IVA
is designed to maximise creditors' interests and avoid bankruptcy for
the debtor. The deal should be structured to pay back the creditors as
much as is possible over a period of time. If you are seeking to "stuff"
the creditors: they will spot this.
Question: What happens if a creditor votes against the deal?
See the detailed guides to voting in IVA's. But briefly, providing more
than three-quarters of creditors who actually cast a vote, do vote in
favour of the deal, the rejection of other creditors does not matter.
They are legally bound by the majority decision. If you have any fears
or concerns about this please feel free to talk to us on our freephone
number above.
Question: What is an interim order?
See Guide to IVA's for fully detailed guide. Basically it protects the
debtor while a deal is proposed, considered and a creditors meeting held
to reach a decision on whether the deal is approved. It means that no
creditors can take further legal action against the debtor (you) without
leave of the court.
Question: I have heard the term moratorium used. What does this mean?
See guides to IVA for full details. Basically this is the same as the
previous question. A moratorium is a protective mechanism used to ensure
that the creditors, as a whole, have time to consider your proposals.
Question: Won't creditors' just reject the deal
anyway - I haven't paid them and they will be angry?
In almost all cases we have been be involved with, the easy answer is
no. However, some (usually smaller) creditors are intent on rejection
out of anger or spite. Produce a quality, well-structured deal though
and it will generally gain majority acceptance.
I have had a visit from a bailiff or Sheriff
what can I do?
If the creditors have asked them to visit they have clearly lost confidence
in you and the ability to collect their money using conventional means.
Consider using the IVA or bankruptcy now. Read the IVA
guide now.
Question: Why come to Debtless for help?
We have been in the industry for 12 years and have been involved with
many thousands of debtors. We also work in business and company rescue.
We have trained advisors who are experts in insolvency and will listen
and advise you free of charge.
We believe that the internet is a great medium for learning about problems
like too much debt and we are the only company to provide hundreds of
pages of online information to distressed debtors, free of charge too.
Finally, we know that getting the proper advice is essential in a very
worrying time like this. Sometimes people don’t like to hear our
advice as it can be painful but we will not give you incorrect advice
just to make money. Our reputation and name is too important to us as
is your well being.
See “Our promise to You” for more
information about Debtless and our parent company - KSA.
|
