Individual Voluntary Arrangements
What Is An Individual Voluntary Arrangement?
An Individual Voluntary Arrangement is basically a deal between you and your creditors which satisfies your outstanding debts. Although each Voluntary Arrangement will vary depending on the individual circumstances, it will usually involve the payment of voluntary contributions for a period of up to five years. At the end of the Voluntary Arrangement any outstanding debts will be written off and you will be debt free.
How Much Will I Have To Pay?
The amount you pay will be what you can reasonably afford. Your income and expenditure will be examined and an assessment will be made of what surplus income is available to be paid into the Voluntary Arrangement for the benefit of creditors. You will only pay what you can reasonably afford and no fees will be payable to us by you. Our fees are paid by agreement of creditors out of the Voluntary Arrangement fund.
How Long Does It Take?
An Individual Voluntary Arrangement will usually take around six to seven weeks from you first contacting us to the Arrangement being agreed by creditors. The information gathering and the writing of the proposal will take two to three weeks and creditors require between two and four weeks notice. Once approved the Voluntary Arrangement will usually last five years after which you will be debt free. However, lump sum Voluntary Arrangements which do not involve monthly payments can be concluded in less than six months.
How Many Creditors Have To Agree?
The proposal for an Individual Voluntary Arrangement is sent to all creditors and a meeting takes place at which the proposal is either agreed or rejected. To be agreed a majority of 75% by value of those creditors who vote is required. Creditors may vote either in person or by proxy and it is only the claims of those creditors who actually vote that are counted. Therefore if only a minority of creditors bother to vote but they vote in favour, the proposal for an Individual Voluntary Arrangement is approved and is binding on all creditors, including the majority who did not vote.
Will I Have To Attend A Meeting Of Creditors?
There is no longer a requirement for you to attend the meeting of creditors, although of course you may do so if you wish. You will need to be contactable so that you can confirm your agreement to any modifications that are proposed. In practice creditors usually vote by proxy and so it is unusual for a creditor to attend in person.
What Happens If My Circumstances Change?
Your are expected to honour your obligations under the Individual Voluntary Arrangement. However, if your circumstances materially change such that you can not honour your commitments, a further meeting of creditors could be convened at which the terms of the Arrangement could be modified. For a modification to be accepted a majority of 75% by value of those voting is required. If the request for a modification is rejected and you can not meet the original terms, the Arrangement will be declared a failure and this may lead to you being declared bankrupt.
Will I lose My House?
One of the advantages of an Individual Voluntary Arrangement over Bankruptcy is that you are able to retain assets such as your house and so you will not usually have to sell your house. If you have substantial equity in your house you may be required to release some of it for the benefit of creditors by, for example, re-mortgaging. Provided you continue paying your mortgage and are able, if required, to release some of the equity, your house will be safe. If you have any concerns with this issue please contact us for further advice.