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The IVA approval process

It can take between four and six weeks to set up an IVA, depending on how quickly you can provide information such as copies of statements and payslips. This is known technically as the 'Nominee' process, as it requires a named Insolvency Practitioner (IP) to put forward the proposal.

Each IP has his/her own process but the general pattern is as below.

(1) Fact find

• An interview, either face-to-face or over the phone, establishes a clear understanding of the situation and confirms that an IVA is the most suitable approach.
• Information is collected including household information, background to the debt, creditors, assets, monthly income and monthly expenditure.
• An IVA application is made either as an individual (single) or as a household couple, married or unmarried (joint).

(2) Supporting evidence

• The IP requests evidence to confirm that suggested monthly payments reflect the full amount that you can afford.
• The IP also confirms that you can live without discomfort.
• A range of evidence is used including
  • Evidence of debts (e.g. statements from each creditor)
  • Proof of income (e.g. payslips)
  • Proof of expenditure (e.g. rent, monthly bills, etc.)
  • Value of assets (e.g. property valuation, make/model/year of car, etc.)
  • Formal identification (e.g. passport, drivers licence).

(3) Draft IVA proposal

• A proposal document is drafted by the IP, often several pages long and in several parts (schedules).
• Your IVA can be one of several kinds:
  • Single (one applicant) or Joint (two applicants)
  • Monthly payments only (normally 60 months)
  • Lump sum only (normally from remortgage)
  • Monthly payments plus lump sum
• Once you have read the IVA proposal, you sign it if you are comfortable with the contents.

(4) Despatch to creditors

• Copies of the IVA proposal signed by you and the IP are sent to each of the creditors.
• Each copy is accompanied by background information and a covering letter from the IP.
• Creditors are asked to read the proposal and vote on whether or not to approve it. They are also asked to provide proof of the claim they have for the debt.
• Copies are also sent to the local county court and to the Insolvency Service.

(5) Creditors' review and voting

• Creditors are given a minimum of two to three weeks to review and respond to the proposal.
• A specific department of the creditor often deals with the IVA, such as the Collections and Recoveries department.
• Major banks often use a major accounting firm to help them process all of their IVAs and it can take a few days for the proposal to reach its destination.

(6) Meeting of creditors

• A date and time is set for a meeting chaired by the IP, where the votes from various creditors are heard. This is usually a 'virtual' meeting with votes sent by fax or post.
• Creditors vote to 'approve', to 'reject' or to 'approve with modifications'. Some creditors will not vote at all.
• If 75% (by value of debts) of voting creditors approve the IVA, it is approved for all creditors including those who rejected or did not vote.
• If voting is undecided, the IP can adjourn the meeting and communicate further with you and creditors for up to two weeks.

(7) Post meeting

• If the IVA is approved, all relevant parties are informed.
• The IP sends out a Chairman's Report showing the voting and meeting outcome.
• The court is also informed and a notice is sent to the Insolvency Service.
• Your IVA is recorded on the Insolvency Register.
• A new bank account is set up for the IVA.
• Payments are made monthly and the IP begins the Supervision period.