The Terms And Conditions Of An Iva |
||||
| By James Driffield |
||||
| An Individual Voluntary Arrangement (IVA) is a legally
binding agreement between the debtor and their creditors. It
consists in a formal repayment proposal presented to an
individual’s creditors via an Insolvency Practitioner. The
debtor must comply with strict regulations in order to
qualify for an IVA. The debtor who wants to undergo an IVA procedure must have unsecured debts of over £15,000 that they owe to at least three creditors. You cannot get an IVA for loans secured against specific. In this case, the creditor will be able to make a general claim on the assets that rest in the borrower’s hands. An IVA aims at protecting the debtor’s assets because it does not put them directly at risk as it would be the case under a bankruptcy procedure. That is why IVA’s are popular amongst people who have large amounts of assets that they want to protect. The debtor or their partner must have a regular source of income originating from employment in order to apply for an IVA. However, in the event of a bankruptcy procedure, any business partnership is dissolved and the debtor will not be able to act as the director of any company. Furthermore, the debtor who undergoes an IVA procedure is still able to trade because there is no obligation to disclose the fact they are under an IVA when obtaining credit. Whereas in the case of a bankruptcy procedure, the amount of credit a debtor can obtain cannot take out any credit over £500. If the debtor’s personal circumstances happen to change while they are subject to an IVA procedure (e.g. loss of employment), the Insolvency Practitioner will act on the debtor’s behalf in order to submit a revised offer to the creditors. However, as it is the case for the initial IVA proposal, the proposal will get approval if the creditors who vote in favour of it represent 75% of the overall debt. Furthermore, if any of the creditors voting are considered as associates (either business associates , family or friends), then a second vote is carried where at least 50% of those voting must approve of the IVA proposal for it to be accepted. What’s more, even though the debtor’s assets are protected, any mortgages will be taken into account as part of expenditures. This is because an IVA proposal may exclude their property altogether. However, it is possible the IVA may propose a re-mortgage of the property or offer income based contributions for a longer period in lieu of the debtor’s equitable interest in the property, and it is also possible for the supervisor to ensure their consent is required prior to the sale or the re-mortgage of the debtor’s property. |
||||
| Article Source: http://interpret.zar.vg | ||||
| About The Author Find out more about IVA criterias on the RSM Tenon Debt Solutions website. |
||||
|
||||
| © 2012 interpret.zar.vg |
