If approved by the majority of unsecured creditors, all creditors will be bound by its terms even if they voted to reject the proposal.
An IVA is supervised by a Licensed Insolvency Practitioner (‘IP’) under a strict regulatory regime. Part of this regime is that the IP is required under such regulation to provide individuals with the best advice for their individual circumstances.
In necessary circumstances protection can be sought form the courts where enforcement proceedings are ongoing or where a bankruptcy petition is imminent.
There is a standstill on interest being charged to your liabilities and an embargo on any collection action by creditors whilst the IVA is in place.
All unsecured debts are dealt with collectively and there is generally one single payment to be made.
Your circumstances will be taken into account when arriving at the monthly sum payable.
There is likely to be an element of debt forgiveness under an IVA, dependent upon your circumstances.
Whilst you may be expected to realise equity in your home if you own the property, this will generally be in the fourth or final year and generally the Supervisor will assist you with this.
If the IVA runs to a successful completion then any remaining balance owed to creditors will be written off, therefore you will effectively be debt free.
You can continue to hold office as a company director.
Negative implications
IVA’s cannot affect the rights of a secured creditor and therefore they cannot be included without their specific consent.
IVA’s are registered in the public domain.
If you do not adhere to the terms of the IVA you may end up being made bankrupt.
It is likely that part of your equity in your property will have to be realised at some stage as a term of the IVA.
Your credit rating will be affected.
An IVA is likely to last for five years if you are paying back less than 100% of your debts.