The Insolvency Act 1896 is where IVA (Individual Voluntary Arrangements) got their legislation. This is the same act that also governs these requirements, processes, as well as the parties. The Office of Fair Trading protects the rights of consumers, as well as legislation. The mandate agrees with the act's because in both the rights of the debtors are protected against the rights of the creditors, who may be tempted to harass the debtors.
An IVA refers to plans that the debtors enter into. These plans are flexible and they are designed to help debtors pay their debts back. Debtors will need to hire the services of an insolvency practitioner, as they will need to oversee the process, and they will also represent the debtor during the legal process. Debtors will also need to inform their creditors, as well as seek their vote on their proposed plan and they will need to make sure to keep them updated on a regular basis. Anything that could affect the arrangement should be mentioned to the creditors.
The Legislation of IVA
If it were not for legislation, arrangements would be just like any other plan. The arrangements bind creditors to abide by the terms of the arrangements, and this is due to the legislation that backs the arrangements. It is important to note that creditors are bind by the terms only when a court has approved of the plan. Debtors are also bind to the terms of the IVA, and if they violate those terms, then the protection that they have gained from the plan will be void, and they can even be prosecuted. This is especially true if the debtor ended up providing false, or even incomplete information.
Things That Affect The IVA Process
First of all, the process can take several weeks to a few months to be completed. This is due to the legal processes that it undergoes. The speed of the process is affected by a few factors, such as how accurate the information that was provided by the debtor was, as well as the consensus striking between the creditors and the debtors. If the debtor ends up giving incomplete information, then the IP can ask them to provide more details, and the court will end up sending back the application so the correct information can be put on it. The debtor may also have to modify the draft proposal in the event the creditors do not approve of it.
Step by Step IVA Process
The first thing a debtor needs to do is draft a Statement of Affairs, after they have concluded that the IVA is the best way to go about settling their debts. The Statement of Affairs is a document that, as of the document's preparation date, shows the assets, income and creditors of the debtor.
The Court and IS application
After the IP verifies the information of the plan, and they approve of it, then the application will be made to the local court, as well as the Insolvency Service, on the debtor's behalf. The applications are designed to find out what the debtor's intentions are, as well as to protect them from creditors who want to pursue them. The IS needs to give the court the go-ahead.
A Creditors Meeting
Creditors are temporarily kept off of the backs of debtors, due to court orders. A meeting between creditors must take place, as this will allow them to vote and decide whether or not the arrangement is approved, and then the debtor will be protected throughout the duration of the arrangement. However, debtors must abide the terms of the arrangement, or the arrangement will be violated.
Arrangements are a way, proposed by a debtor, of allowing debtors to pay their debts back, and they are tailored to their financial circumstances. IVA, unlike agreements done via word of mouth, legally binds the debtor and their creditors. Also, the Office of Fair Trading protects consumers, and this includes debtors who reserve the right to attempt to repay their debts through acceptable, and legal means.
People who are interested in an IVA should hire a professional to help them get through the process that is involved with getting one