UK Credit Problems - IVA's

An IVA is a formal arrangement and is set in motion to help you pay off your debts in a way that is affordable to you.

Individual Voluntary Arrangements

An IVA is based around one monthly payment over a period of 60 months. You will be closely involved in calculating the monthly repayment, as you will be asked to make known all your assets, liabilities, income and your cost of living. This information will ensure that you will not get into even more debt, as the amount payable to creditors is determined by the amount you can afford to pay after your normal cost of living has been deducted.

An IVA proposal has to be prepared by a licensed Insolvency Practitioner (IP). As the debtor you will be sent a copy of the proposed agreement and you will be asked to approve of it. Should you disagree at this point with anything in the proposal you should make it known and look to negotiate any alterations. Once you agree to the proposal the IP will then present it to the creditors. Proposal approved the debtor takes it to their local county court to have it registered. A copy of the proposal is sent to each creditor giving notice of any creditors meeting that may be required. Creditors vote to accept or reject the proposal, they may wish to add their own modifications but can only do so with the debtors consent. In the case of a consumer IVA creditors usually prefer to vote by fax or post rather than attend any meeting. The debtor will usually be asked to make sure they can be contacted by phone on the day of voting.

The rules of an IVA state that, providing 75% (in value terms) of those that have voted, vote to accept the proposals) then the IVA becomes legally binding on all other parties whether they voted or not.
An accepted IVA is monitored by the IP, they ensure that the terms and conditions that were agreed to are properly adhered to. It is the debtors responsibility to pay the agreed payments to the IP who will then ensure that these payments are distributed to all creditors on a pro-rata basis. AN IVA may fail if the debtor does not keep up payments, It is in the debtors own interest to maintain their payments. If a debtor finds at any stage they have difficulty paying they should contact their IP.

Once the IVA has been completed the debtor is considered free and can make a fresh financial start.
If you have an endowment policy linked to your mortgage, then you may have to cash it in to use the proceeds to pay your creditors. The same is likely with any equity you may have in your home, the fact that you have entered into an IVA with creditors means that such drastic measures may be expected of you.