An IVA can allow someone to avoid bankruptcy, protect their property (eg the family home) and resolve all unsecured debts in a 5 year period.
There are fees involved in an IVA, but these are taken from the normal monthly payments into the IVA. The supervisor of the IVA will be a licenced insolvency practitioner who will negotiate this with the creditors involved before the IVA is agreed.
There are 2 types of fees charged by the insolvency practitioner during an IVA:
The amount of these fees will vary depending on the debtor's circumstances, but will be agreed by both the debtor and the creditors before the IVA is approved.
Nominee's fees: This fee covers all the work which is done leading up to a proposal being considered by the creditors. This includes the drafting of a proposal which includes the production of a comprehensive statement of affairs, the gathering of all key documentation required and extensive analysis of the documentation to ensure that an IVA is both acceptable to creditors and sustainable for the debtor. This is followed by a meeting with the creditors and consideration of any changes requested by creditors. The IVA will only be approved if both the debtor and the creditors agree on any changes. The nominee fee varies depending on how much is paid into the IVA, but is approximately £1100 (information confirmed January 2016).
Supervisor's fees: This fee is paid to the IP and covers all the work which is done after the proposal is approved in supervising the IVA and paying the creditors until the IVA is concluded. The supervisory fees are normally capped by creditors at between 15 and 20% of realisations and are drawn monthly from the monthly contributions. The IP will explain all of this fully to the debtor before the IVA is agreed.
Where a customer wants to apply for an IVA, Vincent Bond can gather basic information from them and pass this with the customers consent to a licenced insolvency practitioner. If the IVA is later accepted Vincent Bond will receive a referral fee from the insolvency practitioner.
Important considerations for debtors considering a debt solution:
You give permission to be contacted by a licenced insolvency practitioner (IP) as you wish to find out if you can apply for an IVA.
We gather some basic information from you including personal details, details of your creditors and your income and expenditures. This will be forwarded to the IP so they can contact you and provide you with regulated debt advice.
The IP will call you and explain fully all of the options you have available including the IVA. They will also check through the supporting paperwork you provide proving your situation; this would include documents for proof of income, bank statements and proof of identity. This ensures smoother processing and a higher chance of success.
If you still wish to proceed, the Licensed Insolvency Practitioner will prepare a draft IVA proposal on your behalf. They will become the proposal Nominee. In agreeing to act for you, the IP must be convinced that your proposal is in the best interests of your creditors, that there is a clear advantage for your creditors over bankruptcy and that you are doing the very best you can. If you are self-employed or your situation is particularly complex, you may need to have a meeting face to face with the Insolvency Practitioner.
Each of your creditors is sent a copy of your proposal. They will be given two weeks to consider it. They may accept it, accept it with modifications or reject it. No modification of your proposal will be accepted without your agreement.
At the end of the two week period, a creditors meeting is held. The meeting is chaired by the Insolvency Practitioner. Normally your creditors will choose not to attend and vote by proxy. If creditors representing 75% of the total value of your debt agree to your proposal, it will then be binding on the others. All creditors must then freeze interest and additional charges.
The Court is informed of the result of the meeting and the Licensed Insolvency Practitioner is normally appointed as the Supervisor of the Arrangement. They will monitor your monthly payments, supervise the disposal of any assets and fulfil any other requirements as agreed in your IVA.
Once you have met all the terms of your IVA including making all necessary monthly payments, you will then have settled your debt in full. Any outstanding debt will be written off under the law and you will be left debt free to turn over a new leaf.