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IVA - the process
How does an IVA actually work? This page takes you through the process - all the way from thinking about an IVA to any write-off of unsecured debt upon its successful conclusion.
- Step 1: talk to a debt adviser
- Step 2: the creditors meeting
- Step 3: the monthly payments
- Step 4: the equity release (homeowners only)
- Step 5: the end of the IVA
As with any debt solution, the first step in an IVA is talking to a debt adviser who can help you decide whether this really is the best way for you to address your debts.
So it's vital to talk to someone like the IVA Advisory Centre - someone who understands the alternative debt solutions, as well as the pros and cons of IVAs.
If we believe that entering an IVA is the best approach for you, we'll work with you to put together an IVA proposal, which shows how much you would be able to pay your creditors if your IVA went ahead.
Your unsecured lenders will have the opportunity to look over the IVA proposal we have prepared and decide if they think the terms are acceptable. Each lender may accept it, reject it, or request changes to it.
For the IVA to go ahead, it must be accepted by at least 75% of the voting creditors 'by debt value'
Once it's been approved by enough creditors, the IVA can begin. This means you'll start making your regular monthly payments to the IVA Advisory Centre, and we will subsequently distribute this money among your creditors as agreed.
Remember that an IVA is a legally binding agreement. This means that as long as things go ahead as planned - i.e. you stick to the terms and you keep making your monthly payments, your lenders won't take any further action against you (like taking you to court or trying to make you bankrupt, for example).
This is why it's so important to be sure you can commit yourself to making regular payments for five years. However, not everything in life is predictable, and the IVA process takes this into account.
If something unexpected happens (redundancy, for example, or a birth), we may be able to draw up a new agreement called an 'IVA variation' - if you find you can't keep up with your IVA payments, for example, an IVA variation might allow you to make up for any shortfall later on, by extending the length of the IVA. (Like the original proposal, this IVA variation would have to be accepted by your creditors.)
If you're a homeowner, there's a good chance you'll have to release some equity in your property halfway through the fifth year of the IVA (the 54th month).
Once you've made all the payments you agreed to, the IVA will come to a successful conclusion and you will be debt-free - any outstanding unsecured debt will be written off.
The IVA will remain on your credit report for one more year.
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