Applying for an Individual Voluntary Arrangement

2007-03-08 10:33:40

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Voluntary arrangement is one way to avoid bankruptcy. One type of voluntary arrangement is called an Individual Voluntary Arrangement (IVA).

With an IVA, one is able to pay their outstanding debts in monthly payments within a period of 6 months to 5 years based on what an individual can afford to pay.

To apply for an Individual Voluntary Arrangement, you will need to find a Licensed Insolvency Practitioner (who is also known as the nominee) to represent you.

You submit an initial proposal to your nominee. You and your nominee then determine whether an interim order is required to protect you from the people or companies you owe.

If an interim order is required, the initial proposal is then submitted to court with the order to stop the creditors from demanding payments and exercising legal action against you. The court will then give a 14 day interim order to allow the nominee to submit his comments and report on what you have proposed. After this period, a final proposal including an Estimated Outcome Statement is submitted to court by the nominee, with an advice that a meeting for creditors is required. An order for a meeting of creditors will be issued by the court and any further action against you will be dismissed, until all creditors have considered your IVA proposal. A creditors meeting is then scheduled so that creditors can take a vote on your proposal. If at least 75% of the creditors at that meeting agree to your proposal, then the IVA will be approved. Once approved, those creditors that voted against your proposal will be legally binded to your proposal and have to follow the terms proposed therein. The nominee will then issue a report to all creditors outlining the outcome of the meeting. The nominee’s role then changes to that of a supervisor and he supervises the payment of your loan monthly. Payments are made to the supervisor, and any correspondence addressed to you will be directed to the supervisor.

If no interim order is required the nominee submits your proposal along with their report and comments on your case. A notice to all creditors is sent out advising them of your situation. Creditors will be given 14 days notice of a meeting for creditors where your proposal will be decided upon on whether it will be accepted or rejected. Once an agreement has been made, a report is then circulated to all the creditors and monthly payments are made through the supervisor (formerly to the nominee). The same job of the supervisor then applies as when an interim order is issued.

Although IVA is a good option, do note that all IVAs are recorded publicly and will reflect on your credit file. Also, you may have to liquidate some of the equity on your home and any endowment policies to pay for your debts.

More information on company voluntary arrangement may be sought by a firm seeking a similar option for their office.


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