IVA questions

The term IVA stands for Individual Voluntary Agreement. In an IVA a licensed insolvency practitioner is responsible for monitoring the performance of the IVA. An IVA is set up on behalf of the debtors and their current creditors. This is a legally binding agreement, which once accepted makes the creditors obliged to lend their cooperation to make it possible for the clients to clear their unsecured debts.      

Most clients, when applying for an IVA solution come up with an array of inhibitions and queries with regard to how it works, terms and conditions and benefits and pitfalls. The most prominent of these queries include the following:

How does an IVA work in practice?

The first step is to arrange a meeting between the debtor and the insolvency practitioner. This can either be face-to-face or over the phone. The purpose of this meeting is to evaluate the debtor’s financial situation and determine if an IVA is suitable for them.

The insolvency practitioner will use the information gathered in this meeting to draft a proposal to the creditors. After this has been approved by the debtor, it is presented to the creditors at the creditors’ meeting. If 75% (by value) of the creditors approve the proposal, the IVA is accepted and becomes legally binding. Throughout the arrangement, the insolvency practitioner will monitor its progress and ensure that both debtor and creditors are adhering to its terms and conditions.

How would the clients know if IVA is the correct debt solution for them?
This is the purpose of the initial meeting. IVA companies are required by law to advise potential clients of all the options available to them. It is therefore important that the client is as honest as possible with the interviewer, who will base his/her recommendation on the information received. It is not in anybody’s interest for the wrong advice to be given.

How much it costs to have an IVA?
 
The debtor does not have to directly pay the fees involved in an IVA. Fees are taken from the monthly contribution paid to creditors, thus it is the creditors who ultimately pay the fee. IVA Fees are divided into two parts:

The “nominee fee”- this refers to the amount charged by the insolvency practitioner until the date at which the IVA becomes approved. 

The “supervisor fee”- this refers to the amount that is charged by the insolvency practitioner for supervising, monitoring and guiding the entire agreement after the creditor’s meeting.

You would not be required to pay any extra amount as personal fee because if your agreement does not receives the creditors’ approval then the company would not charge you anything.

An IVA works in accordance with your particular needs and requirements and so it makes sure that you come out clear of your unsecured debts. An IVA is most certainly the perfect solution to even your most complicated financial or bankruptcy problems.