An IVA or Individual Voluntary Arrangement is a ‘fixed term’ repayment plan which normally lasts for 5 years.
The IVA also has fixed repayments that must be maintained, otherwise the IVA itself is under threat of being failed.
So what happens when someone in an IVA starts to experience payment problems? After all, it can’t in anybody’s interest to allow an IVA to fail.
There are bound to be times when personal circumstances change for the worse, impacting a debtor’s ability to keep their IVA payments on track.
It is at this time that the IVA supervisor can call a IVA Variation Creditors Meeting.
At the IVA variation meeting the the role of the Insolvency Practitioner is to proposes a variation to the original IVA proposal, to give creditors an opportunity to accept or reject the proposed changes.
It is viewed that a revised offer to creditors is better than just allowing the IVA to fail, for all concerned
Variations in IVA payments will vary considerably from case to case and each variation meeting will discuss the personal circumstances of the case before it.
But, rather encouragingly, there’s a general consensus, that reaching a revised agreement through a variation meeting tends not to be such a drawn out affair as the original creditors meeting, and variation meetings can be convened relatively quickly.
The voting structure is the same as it was for the creditors meeting i.e. 75% of the votes cast in value terms must agree to allow the variation before it becomes binding.
Most creditors will see the variation meeting as a last chance for the debtor to keep the IVA agreement active, and will take a more favourable view if the offer still beats the debtor’s bankruptcy’s dividend.
If you are having troubles with your IVA payments, you should discuss the possibility of an IVA Variation Creditors Meeting with your IP, and they will guide you through the process.
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