August 4, 2010

IVA (Individual Voluntary Arrangement)

An Individual Voluntary Arrangement, often referred to as an IVA, is a legal and binding agreement between you and your creditors (those to whom you owe money). Every month, you will make a payment of a set amount, for a period of up to five years. To determine what the set payment will be, the parties to the contract will review your financial situation as well as the total debt owed, and arrive at a number that the parties feel is fair. If there is any outstanding debt after you have made all of the required payments, the creditor is to consider the debt settled and accept the outstanding amount as a write-off.

You need to be absolutely clear on what an IVA is before you become involved in one. You even need a special proctor called an insolvency practitioner before you can enter into the contract. An IVA is not just a simple way to deal with your debt. This is a clear contract that you form with your creditors. The insolvency practitioner mentioned above is a licensed professional who will take the time to see if an IVA is right for you.

Based on the information that you provide and what is collected, a proposal will be created. This involves a list of questions that you need to answer that will help you figure out how much you will end up having to repay in the end. After everything is in order, both you and your proctor will review the terms set and sign the contract. Once the contract is filed with the court and is properly enacted, your creditors will halt any legal advances.

The process of voting will begin once the court files the interim order. Three-fourths of the vote need to come back positive in order for the IVA to enact. The creditors will meet with your insolvency practitioner for the voting process. However, the creditors will rarely show up in person. Usually, a fax is sent with their response: either they will agree or deny your claim. After the voting is complete, and you receive at least seventy five percent of the vote, you will be approved.

However, this is not the end of the process and you will still require the aid of the insolvency practitioner. The practitioner will continue on with you, and monitor your payments to ensure that everything is being paid as necessary to each creditor. Many people have only paid 35% of their debt, with the remaining considered fully paid. Once you finish all of your monthly payments within the given span of time – which could be as long as five years – you will be fully relieved of all debts against you. The best part is the fact you will not lose any possessions or property.

Next : Insolvency Or IVA