If you are thinking about setting up an IVA, you will want to know how long it will take to do so. Setting up an IVA will typically take between four and six weeks. There are a number of steps involved, so it is imperative to keep this in mind.
Once you have contacted an Insolvency Practitioner, (“IP”) , you will need to work with the IP to review your financial circumstances and calculate how much you can afford to offer to pay toward your debts each month. Various pieces of paperwork will need to be provided, such as wage slips and bank statements to evidence your financial circumstances.
Once you have given everything that is required to your IP, they will work with you to prepare the paperwork, referred to as the proposal, which will be sent to your creditors so that they can review it, once you are happy with it’s contents.
It will usually take upto a week to prepare the necessary paperwork, and then a further two to three weeks for creditors to decide whether they agree to the proposals. Sometimes it can take a bit longer where further information is required to finalise the proposals, or if further time is needed at the decision procedure, for the IP to negotiate with creditors.
In most cases, as long as your repayment offer is reasonable, the creditors should accept it. It is important to remember that you only need 75 per cent of the creditors who attend the decision procedure to agree for the IVA to be established.
If your creditors approve the proposals, your IVA proposal is a legally binding document. This means that creditors will not be able to chase you for funds anymore. All actions from bailiffs and collection agents need to be stopped.
What should you tell your creditors while waiting for your IVA to be set up?
You may be concerned about how you should deal with your creditors while you are waiting for your IVA to begin. If they have started to chase you during the four-week process, you may be feeling stressed and worried.
The best thing to do here is simply to be honest. You can tell them that you have spoken to an Insolvency professional and decided that an appropriate solution is to propose an IVA and ask them if they can place your account on hold until the agreement has been established.
The majority of creditors are going to be willing to assist you, as they know you are taking positive steps forward to deal with the debt that you have. They will typically give you one or two months worth of breathing space.
In the event the creditors do not help you, and have appointed bailiffs, then you can apply to the breathing space scheme. To apply for this you would need to contact a debt charity or FCA registered organisation, who will then contact your creditors, provided you are eligible. The breathing space scheme will last for 60 days (or longer if there are mental health concerns), and during this time, your creditors will not be able to contact you or take further action, however, you are still expected to continue making payments to your creditors during this time.
Alternatively, you can speak to the IP about the possibility of an interim order. An interim order is an application to court, which can be made when you are in the process of applying for an IVA. The IP will work with you to submit the relevant paperwork to court, which will prevent creditors proceeding with any further legal or recovery action, whilst the interim order is in force. Once the IVA is approved, the court will bring the interim order to an end, as the IVA is now in force. To apply for the interim order, you will need to pay an application fee to court.
Why does it take several weeks to get an IVA in place?
You may be wondering why it takes so long for your IVA to be set up and if there is anything that you can do to speed up the process. One of the main reasons for the time it takes is due to the notice creditors need to be given before the IVA can be approved. There are minimum notice requirements that cannot be shortened.
Otherwise, the other reason why it can take one month for your IVA to be put in place is because the IP needs to obtain documentary evidence of your financial circumstances. Some of the things you will be asked for include wage slips, recent bank statements, and proof of your identity.
You need to make sure that you provide everything that you are asked for as quickly as possible. If you take time to provide the evidence needed, the IP will not be in a position to help you prepare the paperwork, and the overall process will take longer.
The quickest way to provide your IP with your paperwork is to email them a scanned or electronic version. If you are unable to do this, simply post copies and then make sure you send them to the company via first class.
Should you stop paying your debts while making an IVA application?
You are beginning an IVA because your normal unsecured debt payments are not affordable anymore, however, until the IVA is approved, you are still required to make payments.
If you are able to make contractual payments to your creditors, you should continue to do this until the IVA is approved. Otherwise, you can try speaking to your creditors and see if they will accept reduced payments, or place the account on hold, until the IVA is approved.
It is important that you do not borrow any more money during this period.
Needless to say, if you do stop making payments to your creditors, they may begin to contact you. If your creditors get in touch with you while you are making your IVA application, it is imperative to be truthful, as mentioned before. Simply tell them that you are having monetary troubles at the moment and so you spoken to an Insolvency professional. Tell your creditor that an IVA proposal is being made as you speak, and request that they put your account on hold until this is sorted.
If you have any further questions or concerns, please do not hesitate to get in touch for more information.