The new protocol will apply to straightforward consumer IVAs,the definition of a straightforward IVA is below
The straightforward consumer IVA
3.1 Not all cases can be classified as a straightforward consumer IVA. A person suitable for a straightforward consumer IVA is likely to be :
· In receipt of a regular income either from employment or from a regular pension.
· Have 3 or more lines of credit from 2 or more creditors.
3.2 Age is not a consideration, nor is the debt level, though both factors will impact on the overall viability of the IVA.
3.3 The protocol is suitable for both home owners and non home owners. There should be no circumstances where the individual would be forced to sell their property instead of releasing equity. The only exceptions would be where this was proactively proposed by the individual.
3.4 For individuals whose circumstances do not meet the above criteria an IVA may still be the most appropriate means of dealing with their financial problems but their case is unlikely to be suitable for the full application of the protocol procedures. The following are indicators that a person’s circumstances are unsuitable for the application of the protocol. If any of these factors are present in an IVA proposal under this protocol they should be specifically highlighted in the proposal and the accompanying summary sheet:
· Uneven/unpredictable income - people with more than 20% of their income coming from bonuses or commission or who are unemployed.
· Benefit income- a debtor with more than 20-25% of their income coming from benefits. For the avoidance of doubt, tax credit is not a benefit.
· Disputed debts - there should be no known material disputes in relation to the debt.
· Investment properties - those with investment properties would not be suitable for a straightforward consumer IVA.
· Possibility of full and final settlement - where a full and final settlement is possible in year 0 (of over 65% of the total debt).
· Low surplus income - if the consumer has a very small surplus income (i.e. 5 years of dividend payments amount to less than 20% of the outstanding debt) and there is significant equity in their home.
3.5 There is nothing to prevent this protocol being applied to individuals who are self-employed, when that self-employment produces regular income. This should be highlighted in the proposal and the accompanying summary sheet.
3.6 The protocol does not require that the debtor has to follow the protocol process, even though his or her situation may fit within the definition of a straightforward consumer IVA. Where this occurs, but elements of the protocol are still used, this should be highlighted in the proposal and the accompanying summary sheet.
Andy Davie
IVA.co.uk Spokesperson and Website Manager
About me:
http://www.iva.co.uk/andy_davie_profile.asp
IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp
