In UK IVA which is an acronym for Individual Voluntary Agreement is a debt solution which can write off a percentage of the total debt. In some cases, the amount written off can reach 60 to 70 percent of the total debt amount.
UK IVA is an option available for all individuals, single traders and partners. This debt solution is often availed by the debtor to quell creditor pressure. Those who own their property such as a house will not lose their personal assets once UK IVA arrangements are drawn unlike in bankruptcy cases.
For sole entrepreneurs and partners who do not want to lose their business, a UK IVA is the best way to ensure that the business will go on trading. This is a great debt solution especially if the business has a good chance of recovery. Also, if the business recovers and earn them profit, they can use it as repayment for their debts.
UK IVA is a procedure introduced by the government to help debtors draw formal agreement with his creditors so he can make affordable monthly repayment. UK IVA rules and regulations require that the debtor must first apply for it in court.
If the court approves the application, the next step is to hire an Insolvency Practitioner. If you do not know anybody, the court can provide you a list of local practitioners or associations.
The appointed Insolvency Practitioner must file the interim order application in court. The interim order will prevent the filing of bankruptcy by creditors and will ensure that all the creditors actions merit court approval.
The Insolvency Practitioner will then forward the debtors proposal on how he will pay the debt and how much of the debt he wants to be written off. There are various factors considered to be able to come up with the amount to be written off in the proposal.
One factor is the present situation of the debtor. Another is the amount he owed to creditors. And lastly, what amount he is able to pay.
The Insolvency Practitioner will then arrange a meeting between the debtor and all his creditors. For the meeting to be valid, the creditor attendees must make up 75 percent of the total debt.
The debtor must convince the creditors to sign the UK IVA proposal containing the amount of debts to be written off. Once it is signed by both parties, the amount cannot be changed and it becomes legally binding.