What to Expect During Your IVA Approval Process: Key Steps
If you’re considering an Individual Voluntary Arrangement (IVA) to address your financial difficulties, understanding the approval process is crucial. An IVA is a formal arrangement between you and your creditors that allows you to repay a portion of your debts over a set period, usually five to six years, after which any remaining eligible debt is written off. However, getting your IVA approved can seem like a daunting process. Here, we break down the key steps to help you understand what to expect and how we can guide you through each stage.
1. Initial Consultation: Assessing Your Financial Situation
The first step in the IVA approval process is the initial consultation with an insolvency practitioner (IP). During this meeting, you will discuss your current financial situation, including your debts, income, and living expenses. Whether you’re a pensioner or a retiree, we will tailor our advice to your specific needs and help you understand if an IVA is the right solution for you.
If you’re a UK citizen struggling with unsecured debt, this step is essential to determine your eligibility for an IVA. Your IP will also explain how an IVA differs from bankruptcy, giving you a clear idea of the benefits and risks involved.
2. Creating a Proposal for Your Creditors
Once the initial consultation is complete and an IVA is deemed appropriate, the next step is to prepare the proposal. This document outlines your financial situation and details how much you can afford to repay monthly. Your IP will work with you to ensure the proposal is fair and feasible, taking into account your income, outgoings, and any special circumstances, such as being a retiree on a fixed pension income.
The proposal also includes how long the repayment period will be, which typically lasts five to six years. Your creditors will be asked to agree to this arrangement in exchange for writing off any remaining debt at the end of the IVA.
3. Creditors’ Meeting: The Vote
Once the proposal is ready, your IP will send it to your creditors for approval. The next major step in the IVA approval process is the creditors’ meeting, where your creditors will vote on whether to accept the proposal. For the IVA to be approved, at least 75% (by value) of the creditors who vote must agree.
If the proposal is accepted, the IVA becomes legally binding, and your creditors can no longer take further action against you. They will be prohibited from chasing you for payments or adding additional interest and charges to your debts. This is one of the major benefits of an IVA over bankruptcy.
4. The IVA Agreement: Legal Protection
Once your IVA is approved, the agreement will officially take effect. You will begin making your monthly payments, as outlined in the proposal, and your creditors will no longer contact you directly. This gives you the legal protection you need to prevent harassment and gain peace of mind.
For those worried about keeping essential assets, such as your home or car, it’s important to know that the IVA typically allows you to keep these, provided they meet certain conditions. This is one of the key reasons many pensioners and retirees opt for an IVA over bankruptcy, as it allows them to maintain control over their assets while still addressing their debt.
5. Managing Your IVA Payments
Throughout the duration of your IVA, you will make monthly payments to the insolvency practitioner. These payments will be distributed to your creditors according to the terms of the agreement. If your financial situation changes during the IVA, it’s crucial to inform your IP immediately. They may be able to renegotiate the terms of your IVA or temporarily adjust the payment schedule to reflect any changes in income.
6. Completing Your IVA and Debt Relief
At the end of the agreed period, once all your payments have been made, any remaining eligible debt will be written off. This gives you the freedom to start afresh, free from the weight of overwhelming debt. This is the ultimate goal of the IVA process: to offer you a manageable and clear path to financial recovery.
How We Can Help
At Apply for IVA, we specialize in helping UK citizens navigate the IVA approval process. Whether you’re a pensioner or a retiree, our team of experts will work with you to create a tailored IVA proposal that suits your financial situation.
We’ll guide you through each step of the process, ensuring you understand your options and that you’re supported throughout. Our goal is to help you regain control of your finances and work toward a debt-free future.
Take the First Step Toward Financial Freedom
If you’re ready to take control of your finances and explore how an IVA can help, don’t hesitate to reach out to Apply for IVA. We offer a free consultation to help you understand your options and get started on the path to financial relief.
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