IVA Timeline
Starting an IVA can take up only a really short period of time, so people who are unable to pay their debts should take the chance as quick as they can. It is important to mention that the IVA becomes legal only after certain steps are taken, so creditors may take legal action against the debtor (in case an interim order is not issued by the court) before the IVA process is finalized.
The whole process of setting up the IVA may take as long as 60 days, but in many cases it takes less time. Let us see what the exact steps are and how long does each step take!
The process starts when the debtor talks to an insolvency practitioner for the first time. This of course, in case the insolvency practitioner accepts the case.
So, having the first talk to the person who will supervise the whole process is day zero, and the counting starts from here. During this discussion the insolvency practitioner will ask you certain questions; you will have to explain how you got into the situation, and you might also provide documentation related to your exact financial situation. If the discussion is successful, and the insolvency practitioner accepts the case, you will go to the next stage of the IVA.
This stage will take only one or two days, depending on how quickly can you supply the required information to the insolvency practitioner. After the first discussion, usually in one or two day, he will prepare a draft IVA proposal. This proposal is only a draft, and that is the reason the insolvency practitioner needs to know your exact financial situation, otherwise he will not be able to prepare the proposal. Usually on the same day the court will grant an interim order. This means that the court acknowledges that you intend to set up an IVA, and thanks to this interim order creditors cannot take any legal action against you. The interim order becomes void as soon as the IVA is accepted by the creditors. The day after the interim order is granted, the order will be issued to you. We are only at the second day, and now you will around five days without any important events.
The insolvency practitioner will send you the draft of the IVA proposal on the seventh day. You will have to read the document carefully and in case you do not understand something or you do not agree with something, you will have to discuss it with the insolvency practitioner. In most cases every misunderstanding will be clarified on the same day, and the insolvency practitioner will update the draft according to your needs. Since the draft proposal has no value without formal serving, it will be formally served on the nominee (the person the debtor chooses to report on his proposals for the IVA).
On the same day (seventh day), the insolvency practitioner will notice all the creditors about the date of the creditor’s meeting. This is usually done by sending all of them a letter which contains the notice, the updated draft proposal, the nominee’s report and proxy (the proxy has the authority to attend meetings, to vote on behalf of the creditor). During an IVA process the insolvency practitioner has to take up several roles, he will be your nominee, and after the arrangement is accepted by the creditors, he will supervise if you make your payments in time, so for the next five years he will be your supervisor. During the next seven days nothing important happens, and on the fourteenth day the nominee’s report is filed at the court. Once again nothing happens for a week, but the following event is very important! On the 21st day the creditor’s meeting is held. Although this meeting usually takes place on the 21st day, it can be held later, but not later than 28 days from the hearing of the nominee’s report. Creditors here discuss the proposal, and if the necessary majority accepts the proposal, the IVA becomes valid. There are two criteria by which the proposal must be accepted: 75% of the creditors (by debt) must accept it, but also 50% of the creditors (by number) have to agree with the terms of the proposal.
These steps are the same in case of every IVA, but there might be minor differences regarding the date of the creditor’s meeting, or in case the creditors’ majority does not accept the proposal. In this latter case the insolvency practitioner together with the debtor will modify the document and a new creditor’s meeting is organized, until the required majority accepts the proposal.
Getting an IVA usually takes 60 days, but the period might be a little shorter or longer, depending on the exact situation, but the whole process cannot take longer than stipulated in the actual legislation regarding IVAs, the Insolvency Act 1986. The general rule when someone is thinking about getting an IVA is that they should talk to an insolvency practitioner before their situation becomes very uncomfortable, because there are a few days when creditors may take legal action against the debtor, until the interim order is granted.