An IVA or Individual Voluntary Arrangement is a ‘fixed term’ repayment plan which lasts normally for 5 years.
The IVA also has fixed repayments that must be maintained, otherwise the IVA itself is under threat of failure.
So what happens when someone in an IVA starts to experience payment problems?
Well, it is in nobody’s interest to allow an IVA to fail. Creditors would rather the arrangement was kept, just as the debtor would too.
But there will inevitably be times when personal circumstances change for the worse, and a debtor’s ability to keep up to date with their IVA payments is going to be beyond them.
It is at this time that the IVA supervisor can call a IVA Variation Creditors Meeting.
At the IVA variation creditors meeting, the insolvency practitioner offers creditors an an opportunity to accept a revised payment offer from the debtor.
It is viewed that a revised offer to creditors is better than just allowing the IVA to fail, better not just for the debtor but for the creditors too.
Variations of payments will vary considerably, and each variation meeting will discuss the personal circumstances of the case before it, but there’s a general acknowledgement that reaching an agreement through a variation meeting is not usually as tough as trying to agree for the original creditors meeting.
The voting 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 woith your IVA payments, you should discuss the possibility of an IVA Variation Creditors Meeting with your insolvency practitioner, and they will guide you through the process.
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