FinSu IVA
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| The IVA Process |
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The offer to creditors is sent in a document known as the proposal. This sets out the financial circumstances of the debtor and explains the reasons why an IVA should be considered. It will also contain a calculation showing the return that creditors can expect from the IVA, after costs, and will make a comparison with the return that could be expected in a bankruptcy. At the time that the proposal is sent to creditors a notice is also sent to them to convene a meeting of creditors. This is usually held at the offices of the insolvency practitioner but, in practice, creditors do not attend preferring to send their vote in by post. In order for the proposal to be approved 75% of creditors who vote must agree to the proposal. This is quite different from 75% of all creditors and is relevant because a number of high street lenders have a policy of never voting. If at least 75% of voting creditors approve the proposals the IVA becomes effective and its terms are binding on all creditors, regardless of how they voted. At the point where creditors vote they are also given the option of voting in favour of the proposal but only if the debtor agrees to specified changes to the proposal, known as modifications. If the debtor agrees to the changes the vote will be counted as one in favour of the proposal. If the debtor cannot agree to the changes then the vote will be taken as against the proposal. Because the debtor will have to decide whether to accept any suggested modifications the debtor should attend the meeting of creditors but, if that is not possible, at the very least should be available by phone or email to confirm their decision. If the IVA is approved by creditors the insolvency practitioner will be appointed Supervisor of your voluntary arrangement. It will then be his responsibility to ensure that the terms of the IVA are complied with and he will report to creditors regularly and will make payments to creditors on your behalf. You will not have to deal with your creditors again and there should be no reason why they should contact you. On conclusion of the IVA term, provided that you have complied with the provisions of the IVA, the insolvency practitioner will report to creditors and his appointment will end. You will then be debt free. |
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