Introduction
The aim is to give people facing bankruptcy another option.
Individual Voluntary Arrangement (IVA) is an arrangement whereby a debtor appoints a professional to make an offer to his creditors to repay his debts, with the aim of allowing the debtor to repay his debts according to his repayment ability. The application has to be approved by the court and is an Individual Voluntary Arrangement (IVA).
Official Website:
https://www.oro.gov.hk/cht/publications/ivaguide.htm
Basic requirement
-Provide detailed information in good faith, such as all debts, income and expense items, methods to help repayment, etc.
-Have a regular job with a stable monthly income per person and be able to provide income proof.
-The debt has been repaid for at least six months and no new debt has been borrowed.
-Ability to repay debt within 3 to 5 years (interest suspension).
-75% of the total amount owed must be approved by the creditors.
Debtors and nominees
The nominee must have (suitable experience and qualifications as recognised by the court)
The nominee will draft a repayment proposal on behalf of the applicant and commence a creditors’ meeting.
and the Debtor must make an initial deposit of $12,150 with the Nominee for the payment of fees, expenses and remuneration to be incurred by the Nominee in connection with the work to be done by the Voluntary Arrangement
A monthly fee will be charged by the nominee upon successful application until the repayment period ends.
Barriers to Application
-If there is a guarantor for the debt, the creditor will still pursue the guarantor.
-For “secured loans”, creditors will estimate the value of the collateral before considering whether to approve the loan.
-Small debt amount and short repayment term.
-Poor repayment history of applicants.
Important note
Individual Voluntary Arrangement (IVA) is an individual’s way of dealing with his or her debts and is a private matter for the employee. Under normal circumstances, it is not necessary to inform or obtain the consent of the employer. However, the bank may need to know more about the applicant’s work status and actual repayment ability. It is possible that the bank may make enquiries with the employer. Therefore, if the applicant (in good faith) takes the initiative to provide strong proof of employment and income, there is a chance that this procedure can be dispensed with.
If you find that you are unable to meet your daily expenses as a result of the IVA, you should adjust your repayment plan or change your spending pattern. Applicants should inform their nominees of the situation as soon as possible. He should inform his creditors of the situation so that he can strive to make a new repayment plan to enable him to continue repaying the debt.
Under normal circumstances, an IVA proposal will be submitted to the court for verification after obtaining the consent of both parties, and therefore has legal effect.
Individual Voluntary Arrangement (IVA) is a repayment arrangement which aims at enabling the applicant to repay the outstanding amount of the loan in full. It is not equivalent to default or overdue repayment. As long as the person repays the loan in accordance with the scheme, there is no need to worry about any negative impact on his or her credit standing.
Difference from bankruptcy
Anyone can apply for Individual Voluntary Arrangement (IVA) when he/she has difficulties in managing his/her debts. Unlike bankruptcy, the application of Individual Voluntary Arrangement (IVA) will not affect the professional qualifications of the person at the time of application.
Application Procedure
1- appoint a nominee and prepare a balance sheet and income and expenditure account.
2- solicitors and nominees to assist in the preparation of the debtor’s proposal.
3- interim orders and nominee reports on the debtor’s proposal.
4- meetings with creditors
5- implementation and supervision of the approved IVA.
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