Applying for an IVA can definitely be overwhelming, partly because of the drafting of the IVA proposal but also because oftentimes, people don’t understand what information they need to provide.
It’s a good idea to get advice from your insolvency practitioner (IP) about what documents you need to provide when drafting your proposal.
In this post, I’ll be going over the IVA application process and providing you with a checklist of all the paperwork you might need when applying for it.
Why is Paperwork Required When Applying to an IVA?
An Individual Voluntary Arrangement (IVA) is a legally binding agreement which helps you pay off your debts in a manageable way while simultaneously writing off a portion of your debt.
Since an IVA is a financial debt solution, it only makes sense that you’re going to have provide as much documentation and paperwork in relation to your finances as much as you possibly can.
When you opt for an IVA out of all the options available to you in the UK, the first thing you have to do is look for an insolvency practitioner (IP).
Once you’ve found your IP, they will help you draft an IVA proposal. An IVA proposal is a document that is presented to your creditors in the initial creditor meeting.
It has information and details about your finances including your debts, your income, your expenditure as well as your assets.
Then, taking all of this financial information into account, you will include a payment plan for your IVA within your proposal to present to your creditors.
Your creditors will then read through this proposal and determine whether the terms of the proposal are acceptable to them or not.
Of course, when you’re including details and information regarding your finances in your proposal, you’re going to have to provide evidence to support your claims.
The more documentation you provide regarding your finances, the stronger your case will be.
Obviously, you should be completely honest about your finances with your IP and provide evidence to support your claims as much as you can.
Hiding information or giving out incorrect information will only harm you and the IVA process. Not only is it against the terms of your IVA and may result in it failing but it would also cause your IP to set up inaccurate monthly payments for you.
Monthly payments such as these may cause you hardships as they might not be affordable to you.
What Documents do I Need to Apply for an IVA?
Firstly, let us look at income:
In order to prove your monthly income, you’re going to need to provide evidence to support your claims. These would normally be in the form of wage slips (or payslips). I highly suggest that you provide copies of wage slips that cover at least the last three months leading up to your application.
If you are self-employed then, you may be required to provide a copy of your recent tax returns. You can also provide a letter of confirmation of your income by your accountant (if you have one).
If you receive income from other sources, you’re going to have to provide proof for it. For example, if you receive benefits or tax credits, then you may be able to provide evidence for this using a benefits letter.
It’s important to note that you should not delay your application process if you can’t find proper documentation for certain sources of income as you can often prove them using bank statements as well.
As for expenditure, your IP may require you to provide documents that prove what your monthly expenditure is like.
For example, your rent agreement, mortgage agreement, utilitly fees, council tax bill(s), other miscellaneous fees, etc. Again, just like your income, if you can’t find proper documentation, don’t worry too much as you might be able to prove certain expenditures using bank statements. You can ask for more advice regarding this from your IP.
If you have other liabilities that you feel you need to include then you’ll have to provide documentation for those as well.
For example, if you have a car that is part of a hire purchase agreement, then it would be a good idea to include a copy of the original agreement.
Information regarding your creditors and how much debt you have with each of them is something that definitely needs to be included within your proposal. For this, obtaining a letter from each creditor which has information about how much debt you owe to each of them can be helpful.
If you have been threatened with legal action by any creditors in the form of letters, it’s a good idea to include copies of those as well.
If you own a property, it will be important for your IP to know whether or not there is any equity in it.
In order to provide evidence for this, you can provide a copy of your most recent mortgage statement. You can also contact your mortgage provider and ask them for a redemption statement. It may be quite helpful in getting your IVA started as soon as possible.
While it’s true that providing as many documents as you can will definitely help speed things up, it’s also important that you don’t delay your application simply because you can’t find every single document.
Of course, the more documentation you have, the better advice you’ll receive from your IP as they will be able to paint a better picture of what type of monthly payments and fees would be most affordable to you but it’s important not to delay the process because of this.
It’s quite common for certain documents to be provided afterwards while the proposal is being prepared. You can ask your IP for advice on what documents are more important and which one(s) can be provided later.
In the end, you have to keep in mind that while filling out the IVA form, you have to be honest and thorough.
Be truthful about the finances you write about and also be sure not to omit anything.
If you feel you’re missing something or are unsure about whether you should include something or not, you can always ask your IP for advice.
It’s important to note that fees of your IP will be included within your monthly payments. It’s not something you’ll have to pay for separately.
It’s important to provide complete documentation about your income, assets, expenditures, fees and liabilities when you’re applying for an IVA in the UK.
Be sure to provide all necessary documents to ensure your IVA setup process is streamlined.