IVA Proposal

An IVA proposal includes full details of the proposed arrangement;  an explanation of why an IVA is an appropriate solution for this applicant; and why creditor acceptance is a reasonable expectation.

What’s in An IVA Proposal?

An IVA proposal is a legal document and as such, to falsify or fail to disclose information is a criminal offence.

An IVA proposal should also include details of:

• Anticipated applicant income during the period of the IVA.
• The applicant’s assets with estimated values, plus any assets available from friends/relatives which are to be introduced into the IVA.
• Details of any charges on properties (i.e. secured loans) and any significant assets the applicant wants to exclude from the IVA, giving reasons why.
• Details of all the applicant’s debts and details of any guarantees given for them by third parties (guarantor loans).
• The proposed duration of the IVA with levels and schedule of payments to creditors. IVA’s don’t normally last more than 60 months – although in some cases they can be 72 months.
• Details of the IVA provider.
• The fees to be charged by the IVA provider and the basis on which they are calculated; see more about IVA fees.
• Whether the client has made an IVA application in the past 24 months and if so, whether the proposal was approved and what happened to the resulting IVA. If the proposal was rejected what differs between that and this new proposal must be explained.
• Whether the client had previously been bankrupt or subject to any other insolvency proceedings.
• Previous attempts to deal with the client’s financial problems and reasons why they were unsuccessful.

Who prepares an IVA proposal ?

At the time of their introduction in 1986, IVA’s were intended as an alternative for bankruptcy for business people and the self-employed who had fallen into financial difficulties due to their business affairs. Case volumes were low, often complex and typically dealt with solely by an Insolvency Practitioner (IP).

In recent years, IVA’s have evolved into a consumer product helping, in the majority of cases, employed people with more straight forward financial affairs.

As such, IVA proposals are now commonly prepared by a team of IVA drafters, under the supervision of the IP who remains ultimately responsible for the proposal and the advice given to the client. The more complex or out-of-the-ordinary the case, the more direct input from the IP is required.

The IP has a duty to ensure there is a fair balance between the interests of their client and the creditors. It’s in everyone’s best interests that only quality IVA proposals with a high expectation of approval are presented.

Once the IVA proposal is approved by the applicant – it is considered by the creditors at what is called the “Meeting Of Creditors” or MOC.