An Individual Voluntary Arrangement (IVA) is a debt solution that thousands of Brits opt for every year in order to take care of their debts.
Applying for an IVA can sometimes be confusing and it’s understandable to feel overwhelmed by the process at first.
In today’s post, I’ll be looking at how you can apply for an IVA online as well as some things you need to keep an eye out for when applying for an IVA.
What is an IVA?
An IVA is a formal and legally binding agreement which enables you to pay off your debts to your creditors in a manageable and affordable way.
An IVA is a flexible debt solution because you are only obligated to pay what you can afford.
It typically lasts five years and at the end of this duration, any remaining debts that you have are written off.
You can apply for an IVA online or in person.
Applying for an IVA Online
Determining the Suitability of an IVA
Before you apply for an IVA, it’s important to make sure that an IVA is the right choice for you.
Please note that not all debt solutions are the same. While an IVA could work very well for one person, it may have disastrous consequences for others.
This is why it’s important to educate yourself about how an IVA works so you are able to effectively determine whether or not an IVA would be appropriate for you or not.
You can find a ton of information online about how IVAs work and how you can decide whether it would be right for you. Information is also available on how to apply for an IVA online.
Whether a debt solution is appropriate for you or not can depend on a number of different factors such as how many creditors you have, how much debt you’re in, what type of debt(s) you have, your income, your expenditure, your assets, etc.
It’s understandable to find all of this confusing and if you require extra help, you can find it online.
I highly recommend that you take advantage of such services as you will be able to know for sure whether or not an IVA would be right for you.
Looking for an Insolvency Practitioner (IP)
Once you’ve established that an IVA is the right way to go, the next step is to find an insolvency practitioner who will handle your IVA.
An IP is a person who manages your IVA from start to finish. They ensure that you are being treated in a fair manner throughout your IVA and they are also responsible for dealing with your creditors.
They are licensed by the Insolvency Practitioners Association and are typically either lawyers or accountants.
Insolvency practitioners are the backbone of all IVAs which is why it’s highly important that you find one who is sympathetic and pays attention to your concerns.
A good IP can make the difference between your IVA being successful or your IVA failing.
You can easily find an IP for yourself online by going to GOV.UK’s website.
Getting an Interim Order
This is something that is entirely done by your IP. Once you’ve chosen your IP, they may apply to the court for an interim order.
An interim order prevents your creditors from taking any legal action against you while your IVA is being set up. For example, your creditors cannot attempt to make you bankrupt while an interim order is in place.
That being said, interim orders are fairly uncommon as most IPs are able to get any legal action adjourned instead.
Drafting Your IVA Proposal
Once you’ve made contact with your IP and established them to handle your IVA, you’re going to sit down with them to draft your IVA proposal.
While it’s preferable to do this in person, it can be done online as well.
You’ll most likely have to set up an online call with them so you can discuss your finances and the proposal in detail.
An IVA proposal is a document which will be presented to your creditors.
It will contain detailed information about your finances such as the debts you owe, your monthly income, your monthly expenditure as well as your assets. It’s very important that you be thorough and honest with your IP about your financial situation at this stage.
The IVA proposal will also contain a detailed payment plan of how you intend to make payments towards your IVA.
You and your IP will have to analyse your finances and determine what your monthly payments are going to look like.
It’s important to strike a balance between what you are able to afford and what will be acceptable to your creditors.
Once the initial proposal for your IVA has been drafted, your IP will call a meeting with your creditors and present the proposal to them.
This meeting can be done online or at your IP’s office.
You’re not obligated to be present at the meeting but I highly advise that you be there so you are able to defend your interests and provide answers for any questions that your creditors may have.
Your creditors will look over your proposal and decide whether to approve it or not.
In order for your IVA to be approved, 75% of your creditors need to be in favour of the IVA.
It’s important to note that not every creditor’s vote matters as much as the other. The importance of a creditor’s vote is determined by how much of your total debt is owed to them.
For example, if your total debt is £100,000 and you owe creditor 1 £50,000, creditor 2 £40,000 and creditor 3 £10,000, then, creditor 1’s vote will count for 50%, creditor 2’s vote will count for 40% and creditor 3’s vote will count for 10%.
Your creditors will either accept or reject your proposal.
If they accept it, of course, your IVA will be put in place and you can start making monthly payments towards it.
However, if it’s rejected, you’re going to have to take some action.
Your creditors may provide you with reasons as to why they rejected the proposal but they’re not obligated to do so. They may suggest changes to certain terms in your proposal.
You can use the information they provide to make the suggested changes and get your proposal accepted.
If you’re unable to get your creditors to accept your proposal, then you’re going to have to start looking at other ways to take care of your debt.
In such cases, it can be a good idea to seek debt advice from a professional. Your IP may be able to connect you with a debt help professional who could provide you with free advice.
You can also get free debt help from independent debt charities such as Stepchange and Payplan.
Individual Voluntary Arrangements can definitely be a great way to take care of your debts but applying for them can sometimes be confusing.
When you’re applying for an IVA online, ensure that you’ve provided the correct information and the payments expected of you are in accordance with your financial situation.