An Individual Voluntary Arrangement (IVA) usually takes four to six weeks to establish.
This estimate is based on the timeliness of the debtor when providing payslips, copies of creditor statements, and other documentation.
During this stage, an Insolvency Practitioner (IP) is named and issues the proposal, thus the term “Nominee Process.”
The general process followed by an IP is as follows:
Interview with debtor
- The IP conducts a face-to-face or telephone interview with the debtor to clarify the situation. The IP uses the information obtained to determine whether an IVA is the appropriate debt solution.
- Information collected in the interview includes: details regarding household structure, monthly income, monthly expenses, assets, debt, and creditors
- An IVA application is completed as an individual (single IVA) or married or unmarried household couple (joint IVA).
Evidence supporting the situation
- The IP requests information that supports the claim that the suggested monthly payment is the most that can be afforded without living uncomfortably.
- Information includes: documents proving identity, payslips or other proof of income, monthly bills and other proof of expenses, creditor statements and other proof of debts, and asset valuations (including car and property)
Drafting the IVA proposal
- The IP drafts the IVA proposal document, which usually features several sections, called schedules, and is several pages long.
- The debtor reviews the proposal and signs it, indicating agreement with the contents.
- There are several types of IVAs:
- Single IVA involving one applicant
- Joint IVA involving two applicants
- Lump sum only (this normally results from a remortgage)
- Monthly payments only (payments usually last for 60 months)
- Lump sum plus monthly payments
- Each creditor receives a cover letter from the IP, a copy of the signed IVA proposal, and relevant background information
- The Insolvency Service and local county court also receive copies of the documents.
- Creditors must provide proof of their claim for the debt.
Creditor review period and voting
- Creditors are provided two to three weeks for IVA proposal review and response
- Most creditors assign IVA duties to a specific department within the organization
- Large banks may use an outside accounting firm to process IVAs
- A date and time are established for a meeting of creditors, with the IP serving as chair. This is typically structured as a virtual meeting. At the meeting, creditors state their votes, usually provided by mail or fax.
- A creditor may reject, approve, approve with modifications, or refrain from voting on an IVA.
- If the creditors who approve the IVA represent 75 percent of the value of the debts, the IVA is approved for all included creditors including those that did not vote or that rejected the proposal.
- If the vote does not result in a decision, the IP may adjourn this meeting and negotiate with creditors and the debtor for two weeks.
After the meeting
- All affected parties are informed of an IVA approval
- The IP issues a Chairman’s Report that reflects the voting and outcome of the meeting
- The Insolvency Service and the court are notified of the results
- The IVA is recorded on the Insolvency Register
- A bank account is established for the IVA
- The debtor makes monthly payments and the IP assumes the IVA Supervisor role