Variation Meetings for IVA’s
An Individual Voluntary Arrangement (IVA) is a debt solution available in England, Wales and Northern Ireland and is available for individuals who have a minimum debt value of £4,000.
An IVA is a legally bound agreement between the individual and their creditors with the debtor having a duty to adhere to its terms and comply with their appointed Supervisor during the whole period of the arrangement.
The IVA is available for those who have surplus income each month, or a lump sum or third party contributions in order to repay some funds back to their creditors and is used as an alternative to Bankruptcy to enable the debtor to protect their assets.
But what if your circumstances change whilst in an IVA?
An IVA usually lasts for 5 years with monthly repayments paid to the Supervisor. If you are bound by the terms of the arrangement and are unable to meet the level of payments that you have committed yourself for the remaining term due to a change in your circumstances then there is always a solution. You should always contact your Supervisor to discuss which options you have at the earliest opportunity.
At the meeting with your Supervisor you may need to provide evidence to prove that your income has changed and you and your Supervisor will need to agree on an amount of surplus income that you can presently afford each month based on your monthly income and expenditure. A variation usually incurs an extra cost to be paid by you to your Supervisor upfront and it is worth noting this fact. The variation fee should be in your IVA proposal.
A variation meeting of your creditors will be called and a variation proposal will be prepared by your Supervisor and issued to your creditors, advising them of the change in circumstances, and requesting the creditors to vote on behalf of the fresh proposals.
A minimum of 75% in debt value of votes received must be in acceptance of the IVA and your creditors can look to either reject the variation to the proposals, or apply further modifications to which you must adhere to.
A variation meeting can also be used to request payment breaks from the arrangement, or should you wish to propose an early settlement to your creditors by way of a lump sum payment. Your Supervisor must however ensure that the varied proposal is fit, fair and feasible both to yourself as the debtor and to your creditors.
It should be noted that your creditors will always try to ensure that you have offered the best deal possible in order to maximise the repayment to the debts owed to them and this should always be taken in to consideration.
It is always best that you seek your options as soon as possible should you begin to struggle with the monthly repayments to avoid falling in to in arrears. If you breach of terms of the IVA this could result in Bankruptcy proceedings being made against you if this is stated in the proposals.
Always remember that your Supervisor is not your enemy and at DCA we are always more than happy to assist.
Toni James, Administrator