IVA Terms and Conditions

A basic introduction:

The term IVA stands for individual voluntary arrangement. An IVA can be described as a formal debt solution that is designed to help a person who has been struggling with long standing financial obligations. The IVA does this by restructuring the expected payments and making them a new affordable payment. This helps the debtor to be kept up to date with priority expenses that include secured loans, like a mortgage repayment, as well as essential cost of living without the problem of being threatened with legal action by their creditors. The IVA lays down certain terms and conditions to ensure that it works smoothly for the debtors and creditors alike.

What is an IVA?

An IVA is a legally binding method of freezing debts and potentially reducing the total amount of money to be repaid. Additionally, interest and charges are frozen thus reducing the debt further. The IVA lays down certain terms and conditions that are applicable in England, Wales and Northern Ireland. These can be studied as follows.

The IVA terms and conditions:

An IVA Protocol has been introduced in order to better regulate the IVA industry. The protocol aims to ensure that an IVA is managed in a certain fashion in order to maximise the return to creditors whilst still providing a valid debt solution for debtors.

To start the IVA process, the debtor completes a standard application form and provides accurate details of income and expenditure. The IVA Company will then use these details to draft a proposal which is given to the debtor for approval. Once approved, the proposal is presented to the creditors for voting. If any of the creditors are in the process of petitioning for the debtor’s bankruptcy, the IVA Company can apply for an interim order, preventing the bankruptcy proceeding pending the outcome of the creditors’ meeting.

A general conclusion of the IVA terms and conditions:
The debtor and their creditors are required to adhere to the terms of the IVA agreement. Provided that the debtor maintains the payments as specified in the accepted proposal, the creditors will receive regular payments against the debt owed. After a period, usually five years, the IVA is concluded and the debtor is issued with a certificate of completion. Any outstanding unsecured debt is written off at this point.

Should a debtor fail to make the agreed payments, the insolvency practitioner can declare the case in default and issue a failure notice. Once a case has failed, the creditors are once again able to petition for the debtor’s bankruptcy.