Single person - IVA Debt solution case study
Summary: Single person - IVA (Individual Voluntary Arrangement) - this paper outlines the process involved for a single person to propose an IVA
Background
Mary was back in work but the 12 months out of work had left their mark in terms of debt problems. The previously well-managed debts had become out of control during the period of unemployment. Job Seekers Allowance is not known to stretch to contractual debt repayments. Some creditors had been understanding, others less so. A vague feeling of helplessness meant that Mary wasn't as communicative as she might have been with her creditors. Some letters weren't even opened. Now with a stable (albeit lesser paid job), she was determined to sort out her financial mess.
Exploring options
The first company that Mary spoke were convincing, but they left an uneasy feeling with their constant phone calls and insistence on a payment there and then. Wisely, she decided on a second and a third decision and refused to be pressurised into a quick decision. The company specialising in bankruptcy had recommended bankruptcy, the IVA company an IVA ... and so on. Mary drew up a list of pros and cons for each option.
The best solution
This will vary according to personal circumstances and preferences. The advice Mary had received led her to understand the basic principles of debt solutions. She worked out her disposable income by subtracting all her necessary and normal expenditure from her income. It left her with about £200/mth - not a lot to meet £25,000 of debt. She knew she could go for bankruptcy but she did feel she wanted to repay her creditors something - after all they had lent her the money. A repayment plan sounded both less certain and long-term. An IVA would give her the opportunity to repay what she could, with the security of knowing no further action could be taken against her, that interest had to be frozen and that there was a definite end point to the repayments after 5 years.
The IVA process
One of the companies that Mary had spoken to sounded the most reasonable, and didn't want any payment up front. They guided her through the process, assembling necessary paperwork and preparing the proposal. The offer of £200/mth was accepted by the creditors and the IVA, set up and managed by an Insolvency Practitioner began.