There are many reasons people acquire debt, and some debt is manageable, but when debt is out of control and can’t be repaid, creditors will put on the pressure.
Debtors may be at risk of losing their homes, businesses, and other assets to bankruptcy. Before getting to the brink of bankruptcy, it is usually more advisable to try to settle debt with creditors with an individual voluntary agreement. Get qualified IVA advice from an IVA firm, your barrister or accountant, or a licensed debt counsellor. If it is in your best interests to prepare an IVA, there are several steps to follow.
The Alternative to Bankruptcy
An individual voluntary arrangement is an alternative to bankruptcy that benefits both creditor and debtor. It benefits the creditor by getting more repayment than would be received through forced bankruptcy and by costing less than processing bankruptcy. It benefits the debtor by obtaining legal protection from bankruptcy, affording an alternative to debt pressures, and protecting credit records because, while it will show up on a credit report, it shows willingness to repay debt where bankruptcy does not. It is a formal proposal to the creditor by the debtor to repay debt. The agreement is different than a debtor contacting a creditor and trying to make arrangements because it is done in court with an insolvency practitioner, and is a legal agreement that both parties must follow.
Get IVA Advice
If you get IVA advice to enter into an individual voluntary arrangement with a creditor or creditors, begin by finding an authorised insolvency practitioner to work with you. The practitioner will present your proposal to the court, request a meeting of creditors, contact creditors to meet and to vote on accepting the proposal, they will also supervise any resulting arrangement, and handle payments to creditors.
Speak to an Insolvency Practitioner
Once you have found an insolvency practitioner, a debtor works with the practitioner to gather records and draft an IVA proposal, the practitioner applies to the court for an interim order to stop creditors collections actions and bankruptcy petitions for a set period of time. For a successful individual voluntary agreement, the repayment proposal should include a larger repayment to creditors than could be obtained through bankruptcy and must include a total accounting of debts and earnings. Individual voluntary agreements involve repayment schedules for five years, with interest charges frozen and writing off up to 65% of debts after that time.
When to Look at an IVA
Practical IVA advice is that it is generally better to attempt an individual voluntary arrangement before your situation results in bankruptcy, but you can still request one if you are in bankruptcy. If you have applied for an IVA within the past year, the court can’t make an interim order. Creditors are not obligated to accept your proposal but usually will as it is more to their benefit than bankruptcy. If a creditor doesn’t pay as agreed in the arrangement, bankruptcy can still result.
Start the process, see if you qualify for an IVA
There are many reasons people acquire debt, and some debt is manageable, but when debt is out of control and can’t be repaid, creditors will put on the pressure.
Debtors may be at risk of losing their homes, businesses, and other assets to bankruptcy. Before getting to the brink of bankruptcy, it is usually more advisable to try to settle debt with creditors with an individual voluntary agreement. Get qualified IVA advice from an IVA firm, your barrister or accountant, or a licensed debt counsellor. If it is in your best interests to prepare an IVA, there are several steps to follow.
The Alternative to Bankruptcy
An individual voluntary arrangement is an alternative to bankruptcy that benefits both creditor and debtor. It benefits the creditor by getting more repayment than would be received through forced bankruptcy and by costing less than processing bankruptcy. It benefits the debtor by obtaining legal protection from bankruptcy, affording an alternative to debt pressures, and protecting credit records because, while it will show up on a credit report, it shows willingness to repay debt where bankruptcy does not. It is a formal proposal to the creditor by the debtor to repay debt. The agreement is different than a debtor contacting a creditor and trying to make arrangements because it is done in court with an insolvency practitioner, and is a legal agreement that both parties must follow.
Get IVA Advice
If you get IVA advice to enter into an individual voluntary arrangement with a creditor or creditors, begin by finding an authorised insolvency practitioner to work with you. The practitioner will present your proposal to the court, request a meeting of creditors, contact creditors to meet and to vote on accepting the proposal, they will also supervise any resulting arrangement, and handle payments to creditors.
Speak to an Insolvency Practitioner
Once you have found an insolvency practitioner, a debtor works with the practitioner to gather records and draft an IVA proposal, the practitioner applies to the court for an interim order to stop creditors collections actions and bankruptcy petitions for a set period of time. For a successful individual voluntary agreement, the repayment proposal should include a larger repayment to creditors than could be obtained through bankruptcy and must include a total accounting of debts and earnings. Individual voluntary agreements involve repayment schedules for five years, with interest charges frozen and writing off up to 65% of debts after that time.
When to Look at an IVA
Practical IVA advice is that it is generally better to attempt an individual voluntary arrangement before your situation results in bankruptcy, but you can still request one if you are in bankruptcy. If you have applied for an IVA within the past year, the court can’t make an interim order. Creditors are not obligated to accept your proposal but usually will as it is more to their benefit than bankruptcy. If a creditor doesn’t pay as agreed in the arrangement, bankruptcy can still result.
Start the process, see if you qualify for an IVA