We've put together a list of questions we frequently get asked by intermediaries about IVAs. If you can't find the answer you're looking for, please give us a call on 0845 60 60 661.
What is an IVA?
An IVA is an alternative to bankruptcy. Basically it is a contract between your client and their creditors. The terms of your client's proposal to creditors may be flexible, but creditors will reasonably expect their prospects of recovering money to be at least as good as in a bankruptcy. Furthermore, they will expect the proposal to contain sanctions (such as a right to bankrupt your client) if they do not fulfil their part of the bargain.
How does my client enter into an IVA?
Firstly, your client must owe a minimum unsecured debt of £14,999 to at least 3 different creditors. Your client must have a regular income to help make a monthly contribution of at least £200 per month.
Call us today and we can advise if an IVA is the right debt solution for your client. If it is, we can help them to make a proposal to their creditors. If the creditors accept your client's proposal, an Insolvency Practitioner then becomes the ‘supervisor' of the arrangement and carries it out on your client's behalf.
How much will an IVA cost my client?
At Invocas Financial we do not bill your client for the work done. A meeting is called and your client’s creditors vote on the IVA proposal. As part of that process, they’ll agree how much we will get paid.
The amount of fees will be fully explained to your client before they commit to this solution.
How long does an IVA last?
Normally an IVA lasts for 60 months (5 Years).
What are the advantages of an IVA?
An IVA allows your client to agree a fixed monthly payment with their creditors. Once your client has made their final payment, all outstanding debt is legally written off by the creditors.
To summarise:
- It is affordable - your client only pays what they can afford based on their income and expenditure
- It avoids bankruptcy
- If your clients adhere to the IVA for the specified duration, they will be debt free from all debts included in their IVA
- Your client’s creditors will write off a large chunk of the money your client owes them
Will my clients get to keep their home if they enter into an IVA?
Normally yes, however with an IVA your client will have to release any equity available in their property to pay their creditors. We will be able to advise your client fully on this.
Once my client has agreed to an IVA, is it always accepted by the creditors?
Your client's proposal will be voted on by their creditors at a creditors meeting. Generally, if over 75% by value of your client's creditors who are represented at the meeting (in person or by proxy) vote in favour, the IVA will be implemented. Creditors may put forward changes to the proposal, but they cannot impose them on your client - your client can decide whether or not to accept them.
How does my client increase the likelihood of the creditors approving their IVA?
An IVA gives your client an opportunity to avoid bankruptcy. If it is not approved, a creditor may still decide to petition for your clients bankruptcy. To avoid this, your client should put forward the best offer they can to your creditors.
What are my next steps?
If you think your client may benefit from an IVA, call our team on 0845 60 60 661 who would be happy to discuss any cases with you.
