Insolvency Practitioners and IVA Management
When you start an individual voluntary arrangement (IVA), you pass control of your relevant finances over to a designated insolvency practitioner (IP).
The IP will manage your case, dealing with your creditors and arranging distribution of the payments you make each month among them, as well as taking on various other responsibilities.
We’ll go over the basic role of the IP in this guide so that you know what to expect if you decide that an IVA is the appropriate solution to your debt problems.
Dealing with Creditors
Once the majority of your creditors (or, the creditor(s) to whom you owe 75% of your relevant debt) have agreed to the IVA, it becomes official.
Once the IVA is made official and put into action, the creditors to whom you owe the debts involved are no longer allowed to contact you or harass you regarding repayments.
Instead, all communication with your creditors becomes the responsibility of the IP.
If your creditors do continue to harass you, then you should get in touch with your IP immediately so that they can resolve the issue.
An IVA involves a reduced payment plan over an extended term in an attempt to help you get out of otherwise insurmountable debt.
Your IP will help you work out a monthly payment plan when the IVA is being set up. Each month, you pay the amount decided upon to the IP who will then distribute among your creditors in an appropriate manner.
Some IPs will take a portion of each monthly payment for themselves as a fee but this is not always the case.
Your IP will conduct a review of your situation and of the progress of the IVA every year in order to make sure that everything is moving along correctly.
This will involve a careful analysis of your financial situation and you’ll generally be required to provide some financial documents like payslips. This is to make sure that you haven’t failed to report any increases in earnings or other changes to your financial situation that might considered relevant to the IVA.
If you are found to have been withholding relevant information then you may find that you IP forcibly terminates your IVA and you are left in a tricky situation. As such it is important that you remain fully transparent about your financial situation throughout.
What if my situation changes during the course of my IVA?
If your financial situation changes for better or for worse during the course of your IVA, then you’ll need to get in touch with your IP to inform them.
If your income increases in any way, then you may be required to change your payment plan accordingly. Most IVAs come with a windfall clause, which means that if you come into any unexpected cash, from inheritance or from a bonus at work for example, then you will most likely be required to put some or all of it towards your debt repayments.
If, for any reason, you find yourself unable to continue to make payments at the agreed rate, then you may be able to alter your plan accordingly.
Your IP will also be responsible for cancelling your IVA if you choose to do so for whatever reason.
You should carefully consider this decision though and discuss it with your IP beforehand so that you are absolutely clear on the potential repercussions that cancelling an IVA might have on your financial life.