When a person has decided that an IVA is their preferred option to solve their particular debt problem, they will need to instruct an Insolvency Practitioner (IP) to assist them in preparing the IVA proposal.
The proposal generally takes about 2 weeks to draft, with a further 15 days legal notice to creditors of the impending creditors meeting at which creditors will be invited to vote.
During this period the applicant is not actually protected by the IVA as agreement has yet to be reached.
It is only after the IVA has been accepted by the necessary majority of creditors that it becomes legally binding and, therefore, able to protect against any legal action to recover the debts.
This means that in some extreme cases a creditor might commence legal action, such as seeking a bankruptcy petition against the applicant prior to the IVA having been agreed.
When faced with this situation the applicant has the chance to apply for an ‘Interim Order.’
An Interim Order is a court order which can be applied for by the applicant at their local County Court, usually after a large amount of help from their Insolvency Practitioner.
However, once the Interim Order is lodged in court the effect is immediate. The applicant is protected from that moment against the commencement or continuation of any legal action by their creditors for a set time period, which is usually set to beyond the date of the IVA’s creditors meeting.
N.B.. An Interim Order is particularly powerful when a Bankruptcy petition has been served or when a creditor is applying for a charging order over the applicant’s property.
Once the Interim Order is in force, the IVA process can continue on towards the creditors meeting without threat of further action being pursued by any creditor
At the time of writing this article there is a court fee of £180 for each proposal, i.e. an Interim Order Application for a joint IVA would be £360 and should, therefore, only be applied for if and when there is a real threat of legal action being taken against the applicant.
If you would like more information about IVAs or have any questions related to the IVA subject, call My IVA Adviser now on 0800 088 7503 .