The IVA Procedure
If an individual is looking to use an Individual Voluntary Agreement (IVA) for help with their bad debt, there are certain requirements that need to be met. Furthermore a licensed professional is also required in order to apply the procedure on that individuals behalf. Below we will take a look at the procedure which is required in order to apply for an IVA.
Firstly the debtor must draft a proposal that will be presented to the creditors. This is supposed to be done before instructing a licensed insolvency professional, however the hire of the professional usually comes first in reality.
The proposals are presented to court and the positive entries are outlined with a view to obtaining an Interim Order. This Interim Order will prevent creditors taking any action against the debtor while a meeting of creditors is called to determine whether the proposals are acceptable.
Should the Interim Order be granted, the insolvency practitioner will then provide the creditors with the following:
- The proposals;
- Their own comments of the debtor’s proposals;
- Time and location where the creditors vote will take place;
- A schedule to the creditors required to approve the IVA;
- Statement of affairs (assets and liabilities of the debtor);
- List of creditors;
- List of fees charged by the supervisor after IVA approval;
- Voting proxy form.
Once the above has been circulated to the creditors, a meeting to vote will be held not earlier than 14 days from notice. Here the creditors will decide whether the proposal is acceptable to them. It may be accepted outright or declined with the possibility of modifications to the IVA terms.
The acceptance of the IVA proposal requires that 75% of value of the creditors to vote and if approved the creditors will all be bound by the agreement if it is approved whether a particular creditor voted or not.
Once an IVA is approved, the insolvency professional will continue to ensure that the proposals are adhered to and take the role of distributing the debt to the creditors.
