As you’re reading information about IVAs, you will regularly see references to the term ‘IVA Proposal‘.
But what, you might ask, is an IVA Proposal, who prepares it and why?
The answer to these questions are key to understanding how an IVA is set-up and, once set-up, administered.
The IVA Proposal
The IVA Proposal is the legal document that outlines the IVA applicant’s offer to their creditors.
It also gives the applicant the perfect opportunity to explain their circumstances to their creditors and tell their side of the story.
The proposal sits right at the centre of the IVA process from start to finish and, if necessary, can be referred to at any stage by the IVA supervisor to ensure the IVA’s terms are being adhered to by all parties.
Who prepares the IVA proposal?
The proposal is prepared by the IVA drafter, a key member of the Insolvency Practitioner’s team.
It’s the drafter’s responsibility to make sure the proposal contains all the relevant aspects of the applicant’s financial circumstances, as well as detailing the offer being made through the IVA.
What’s in the proposal?
The proposal contains a complete assessment of the personal and financial circumstances of the applicant, laid out for the creditors to consider.
The proposal contains:
The name and address of the applicant and the reasons for the application.
- Background To The Proposal
Applicant’s age, marital status, a list of their dependents and a brief history of their financial situation.
Details of the applicant’s accommodation, their income, any vehicles they own and any other assets or equity.
- Outline Of The Proposal
Details of the standard terms of the IVA, including:
- Its duration and how much it will repay to creditors.
- Details of the IVA Contributions and the procedure in the event of arrears.
- An outline of the annual review process and what happens in the event of additional income.
- Details of the windfall clause and after acquired asset details.
- What happens in the event of redundancy
- Details of payment break
- A list of total liabilities.
- Creditor details
A complete list of creditors, how much they are claiming they’re owed and details of their rights for receiving payments from the IVA.
- Applicant’s Legal Obligations
Details of the legal obligations being undertaken by the applicant including the use of credit during the IVA, the defence of legal proceedings and any change of address.
- Information Required To Be Disclosed
Details of any changes to the standard terms and conditions of the IVA and the EC Regulation on insolvency proceedings and:
- Any associated creditors or guaranteed debts.
- Details of any transactions at an undervalue, preferences and extortionate credit transactions.
- Details of the Insolvency Practitioner’s fees and payments to referrers.
- Details of the disbursements.
- Name and address of the Nominee
Checking the proposal
After the IVA proposal has been drafted, a copy will be sent to the applicant to read through.
As you can imagine, it’s not unusual for there to be the odd mistake in such a detailed document, so care should be taken to ensure any inaccuracies are marked for correction by the drafter on the proposal’s return.
Particular attention should be given to the financial statement of affairs, as it details the applicant’s budget costs. Check the figures are accurate and, again, highlight any inaccuracies for the attention of the drafter.
A mistake in the budget figures could lead to an IVA payment being set at an unaffordable level, so it pays to check.
Returning the signed proposal
Once signed and returned, a copy of the proposal will be sent to each creditor for their consideration.
Creditors are given a minimum of 14 days to consider the IVA proposal in front of them.
They will be notified of the date of the Creditors’ Meeting, at which they will be invited to cast a vote, either accepting or rejecting the proposal.
If you have any questions about the IVA process, why not call us for a chat on 0800 856 8569 Or, alternatively, complete this form and one of our advisers will call you back at your preferred time.