If you are considering an Individual Voluntary Arrangement (IVA) to manage your debt, you may be wondering how to deal with your creditors during the process. The good news is that an IVA offers a legal structure that can help reduce the stress of dealing with creditors, providing you with peace of mind as you work toward financial freedom.

In this blog, we will walk you through the key steps for managing creditor interactions during an IVA, ensuring that you can focus on your financial recovery without constant worry.

1. What Happens to Creditors Once the IVA is Approved?

Once an IVA is approved, creditors are legally bound by the terms of the agreement. This means that they can no longer contact you directly to demand payment or take legal action against you. All communications should go through your insolvency practitioner (IP), giving you much-needed relief from creditor harassment.

2. How Your Insolvency Practitioner (IP) Helps with Creditors

Your IP plays a crucial role in managing communications between you and your creditors. Here’s how they can help:

• Negotiating with Creditors: Your IP will prepare and present a proposal for the IVA to your creditors. They will negotiate on your behalf to ensure that the IVA is accepted, allowing you to repay a portion of your debt over time.
• Handling Creditors’ Queries: Once the IVA is in place, your creditors can no longer contact you directly. Any questions or concerns they have will be directed to your IP.
• Legal Protection: Once the IVA is agreed upon, your IP ensures that all creditors adhere to the terms, preventing any further legal action, including bankruptcy proceedings.

3. What to Do if a Creditor Continues to Contact You

Although creditors are legally obligated to respect the IVA, there may be occasional instances where a creditor contacts you directly. If this happens, follow these steps:

• Remain Calm: Explain to the creditor that you are under the protection of an IVA, and provide your IP’s contact details.
• Inform Your IP: Report any direct contact from creditors to your IP, so they can take appropriate action to enforce the terms of the IVA.
• Document Everything: Keep a record of all communications with creditors, including phone calls, letters, and emails, and pass this information to your IP.

4. What Happens if a Creditor Disagrees with the IVA?

Not all creditors may agree with the IVA proposal. However, there are legal provisions to handle situations like these:

• Creditor Votes: During the IVA proposal process, creditors vote on whether to accept the arrangement. A minimum of 75% (by value) of the creditors who vote must approve the IVA for it to proceed.
• Further Negotiations: If a creditor rejects the IVA proposal, your IP will try to negotiate with them to reach a compromise or modify the proposal to gain approval.

5. How to Protect Your Assets During an IVA

While most unsecured debts can be included in the IVA, some assets may be at risk depending on the agreement and your financial situation:

• Home: If you own a home, your IP may ask you to release equity towards the end of the IVA. If you’re unable to remortgage, your payment term may be extended by up to 12 months.
• Car: If your car is essential for your daily life or work, you are typically allowed to keep it. Your IP will work with you to ensure that essential assets are protected.

6. What Happens After the IVA is Completed?

Once you’ve completed your IVA and made all agreed-upon payments, any remaining eligible debt will be written off. This provides a fresh start, free from the burden of debt, and a clear path toward financial recovery. Your creditors will have no further claim on the remaining debt, and you can start rebuilding your credit.

7. Special Considerations for Pensioners and Retirees

For pensioners and retirees, managing creditors during an IVA can be particularly challenging due to fixed incomes and limited ability to make large payments. However, IVAs are designed to be flexible and can be tailored to meet your financial situation. Your IP will work with you to ensure that your repayment plan is fair and manageable based on your income and assets.

How We Can Help

At Apply for IVA, we specialise in helping UK citizens, including pensioners and retirees, navigate the IVA process with ease. From handling creditor negotiations to offering guidance on how to protect your assets, we’re here to support you every step of the way.

If you are struggling with debt and considering an IVA as a solution, don’t hesitate to reach out for a free consultation. Our experienced team will help you understand your options, manage creditor expectations, and give you the peace of mind you deserve.

Take Control of Your Debt Today

Don’t let creditors control your life. Get in touch with us today at Apply for IVA to start your journey toward debt relief. Let us guide you through the IVA process and provide the support you need to regain financial stability.

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