|Structured Settlements Information|
Individual Voluntary Arrangements. IVA
What is an IVA?
There is an alternative to bankruptcy called an "Individual Voluntary Arrangement" (IVA). This is a formal arrangement through the county court to pay an agreed amount off your debts over a shorter period. This usually means paying a high monthly instalment over 3 to 5 years. The rest of the debts are written off. Some IVAs are set up on the basis of using a lump sum to make offers to the creditors rather than make monthly payments. Some IVAs are a mixture of both.
Is an IVA suitable for me?
An IVA is not suitable for everyone. It is usually only worth looking at if you have a lot of money to spare every month to pay your creditors and/or you have a lump sum or assets that can be included.
What is the procedure for an IVA?
An IVA has to be set up by an insolvency practitioner (IP). An insolvency practitioner is usually an accountant or solicitor who is authorised to set up IVAs. Once an IP has agreed to make an IVA proposal for you, they can apply to the county court for an "Interim Order".
This stops your creditors from starting bankruptcy proceedings against you. It also stops any other enforcement action without the court's permission whilst the Interim Order is in force.
From 01/01/03 you can put forward an IVA proposal without applying for an Interim Order first. This may reduce your costs but means your creditors can still take enforcement action against you until the IVA is agreed.
You can ask for an IVA even after you have gone bankrupt. See the section on "Fast Track IVAs'. There are no rules on how much debt you have to be in before you can ask for an IVA.
The IP sends the IVA proposal to your creditors and arranges a formal meeting called a "Creditors Meeting", giving the creditors at least 14 days notice. Check with your IP and make sure that all your creditors have been contacted. If creditors have no notice of the meeting they do not have to stick to the terms of the IVA and can pursue you for their debt separately.
At the meeting creditors have to vote on whether to accept the IVA. Often creditors send their vote to the IP and don't actually come to the meeting. If 75% of your creditors "by value" who actually vote agree to the IVA, then the rest are bound by the IVA even if they voted against it or did not vote at all. "By value" means the creditors to whom you owe 75% worth of debt not the number of creditors you have.
So if the creditors to whom you owe the highest amount vote against the proposal then the IVA may not go through. Sometimes creditors will haggle about the terms of the IVA and ask you to agree to pay more every month or include assets you do not want to lose. They may ask you to make payments over a longer period.
Once the IVA is agreed your IP will supervise the arrangement and make sure you make the payments. If a creditor comes to light after the IVA has been agreed, they can claim the amount they would have received as if they had been included in the IVA at the start.
If the IVA does not go through then you are back to the same position as you were in before the Interim Order and you have to negotiate with your creditors separately. You have to wait 12 months before you can apply for another Interim Order.
How do I find an Insolvency Practitioner?
Your local county court may be able to give you a list of insolvency practitioners. You can also ask your local Official Receiver's office for list. If you cannot find your local Official Receiver's office contact The Insolvency Service Central Enquiry Line on 020 7291 6895. Check out the Yellow Pages or telephone directory.
WARNING: Be careful of companies who suggest they can put you in touch with an IP if you pay them a fee. These are known as "ambulance chasers". You can contact an IP directly without going through another company.
A list of IP's can also be obtained from:
The Association of Business Recovery Professionals
The Insolvency Practitioners Association
The Insolvency Practitioners Policy Section
There is an Insolvency Service publication called "The Directory of Authorised Insolvency Practitioners". This is kept in local reference libraries. It lists IPs by area and who regulates them. If they are not licensed then you should not use their services. We can also give you details of some IPs but are not in a position to actually recommend any companies listed.
All IPs will charge fees for setting up and supervising an IVA. It is very important that you shop around to make sure you are getting the best deal. Typical fees are over £4,000 and sometimes a great deal higher. Many IPs will offer an initial free meeting to look at whether an IVA is suitable in your situation. Some IPs will only accept payment of their fees up front. Other IPs will allow you to pay the fees as part of the monthly payments over the term of the IVA.
What if I can't pay the IVA once it is agreed?
You may not be able to keep to the monthly payments under the terms of the IVA. This might be because your circumstances have changed or because the payments were set unrealistically high in the first place.
It is very important that you talk to the IP supervising your IVA.
The IP can ask the creditors to agree to a lower amount. You may be charged another fee for doing this. If you can't agree a new or "modified" IVA then the IP can terminate the old IVA if you cannot make the agreed payments. It is then possible for the IP to apply to make you bankrupt.
If the IP decides it is not worth doing this then your creditors can take action against you instead. You will need to try to negotiate payment arrangements with each of your creditors separately to stop this happening.
What are the advantages of an IVA?
You may well be running a small business which would be difficult to keep going if you were bankrupt.
You may be a profession where you could lose your job if you go bankrupt such as accountancy/police/ armed forces.
You may have access to a large lump sum and want a formal arrangement with your creditors to accept the lump sum and write off the rest of the debts.
You may have a very high monthly available income to make payments.
You will not automatically lose your house or other assets which can be kept out of the IVA with the agreement of the IP and your creditors, although the creditors will usually want most of the equity in your house. See the section on "Disadvantages of an IVA".
You will not have the same restrictions on you as you would if you went bankrupt, e.g. you can still use your bank account without saying you have an IVA.
What are the disadvantages of an IVA?
If you do not keep to the terms of the IVA then the IP or your creditors can make you bankrupt.
If creditors do not accept the IVA proposal you are back to square one. You cannot make another IVA proposal for 12 months.
If you paid an up-front fee for your IVA and it is not accepted, then you will have lost the fee and be in a worse position than when you started.
If you own your house the IP and creditors may make you agree to sell your house as part of the IVA. It is standard for IVA agreements to include a clause that you will get your house valued after a set number of years with a view to giving most of the value or "equity" in your house to the creditors.
You may be able to pay instalments for an extra year to cover the amount of equity in your home. However it could mean selling your house if you cannot raise the money. Your options may include you or a partner taking out a new loan and even securing it on your house. This may be difficult as your credit rating may not be good enough to get a loan through a reputable lender and you would be putting your house at risk.
There is a risk that the IVA is agreed on the basis of monthly payments that you cannot afford long term. You must be very careful that the payments are set at a realistic amount in the first place.
If your circumstances change and you can no longer afford the payments your IVA may end if the IP cannot persuade the creditors to accept a new agreement.
Fast track IVA
From April 2004, under the Enterprise Act, there are new rules on how to get an IVA after you are made bankrupt. You can apply for a Fast Track IVA by putting a proposal to the Official Receiver even after you are bankrupt. The Official Receiver may agree to act as supervisor of the IVA if they feel it will produce a better deal for your creditors than they would receive through bankruptcy.
There are set fees for this process so costs are reduced.
There is no formal creditors meeting.
The proposal is sent by post and creditors can either take it or leave it.
The IVA proposal cannot be modified.
If the IVA is agreed, the Official Receiver will annul your bankruptcy order.
If your IVA fails the creditors could make you bankrupt again but the Official Receiver will not take any further action.
Where will details be kept about my IVA?
Public Register Records of IVAs are kept on a public register. To find out if someone has an IVA, records can be searched by anybody including members of the public either in person, by post or by fax. A copy of the search form can be printed from the website below or you can ask the Insolvency Service to send you a form. Your IVA will remain on the register until it is completed or terminated.
The Individual Insolvency Register
You can also search the register in person by visiting your local Official Receivers Office.
Credit Reference Agency Files
Complaints about insolvency practitioners
To complain about an insolvency practitioner you need to find out which authorising body they are registered with. This should be given to you by your IP. You should first make your complaint in writing to your IP. If you are still not happy then write to the authorising body for your IP. There is a useful leaflet called "How to make a complaint against an Insolvency Practitioner". You can get this from the Insolvency Service or Phone us for advice
The Law Society
The Competent Authority
The Institute of Chartered Accountants (ICAEW)
The Association of Chartered Certified Accountants (ACCA)
The Insolvency Practitioners Association
If the Insolvency Practitioner is acting as a Trustee in Bankruptcy you need to complain to the Official Receiver first, followed by the Insolvency Service.
For details of company liquidations or company disqualifications contact:
The Registrar of Companies
The author, Michael Sherriff, has been writting articles for the past five years relating to credit repair and money matters. His UK top selling ebook "UK Credit Secrets" has blown away the myths surrounding the credit industry and has been called the UK Credit Repair Bible since being released to the general public.
More details can be seen at UK Credit Secrets
Should You Sell Your Structured Settlement?
The courts have just awarded you a settlement in the amount of $1.3 million dollars for injuries you sustained while using the Widget Corporation's product. However, the terms of the settlement require that Widget pay you a small amount right now, with the remaining funds to be dispersed over the next 20 years. This "structured settlement" works fine for some people, but you have medical bills that need to be paid now. What can you do about it? Answer: you can sell your structured settlement and receive additional cash now.
Annuity Transfer - What Are the Risks
Many people who know in the back of their minds that they got the possibility to transform a monthly payment or annuity long term payments into a big lump sum and by that to relieve some temporarily financial problems, or need to buy a new car or a house or help their children and so forth are tempted to exercise this process into action. Although it is a very natural feeling and sometimes even a real life need or deep inner quest for power and control, it is not in their best financial interest to say the least.
Class Action Lawsuits
First of all, let me say that anyone who has been in any way hurt or injured by any other party and settled through a class action lawsuit, disregard this article. I am more interested in the little frivolous lawsuits that award pitiful amounts to offended parties who most likely had no idea they were offended.
Structured Settlement ? Guaranteed Income for those with Disabilities
Up until twenty years ago, anyone who won a lawsuit as a result of a claim involving worker's compensation, wrongful death or accident had to accept a lump sum payment as their compensation. The payment would be intended to be invested, with the beneficiary living off of the proceeds for as long as their recovery was expected to take. In many cases, this type of settlement works fine, but in other cases, the results are a disaster.It is difficult enough for someone who has been through the trauma of an accident or illness to have to adjust to a new lifestyle without having to also become an expert in the art of financial investing. If you have been active all of your life and you suddenly find yourself in a wheelchair and having to handle assets of several hundred thousand dollars or more, you could be overwhelmed. You could hire someone to handle the investments for you as well as the tax issues, but what if the person you hired wasn't trustworthy? What if you hired a greedy relative who took all of the money? What if you hired someone incompetent? These problems, and statistics that show that people who receive large sums as compensation for accident, injury, or wrongful death often spend all of their money in a short period of time, led to Congressional action in 1982 that amended the Federal tax code to allow for structured settlements. A structured settlement is simply an agreement between the responsible party and the injured party that the payments will be made over time, rather than in a lump sum. The two parties reach an agreement, the party responsible for payment purchases an annuity, usually through an insurance company, and the injured party will receive steady income over a period of years or even a lifetime.The payments are adjusted for inflation; the sum of all of the payments will be greater than if the amount had been paid as a lump sum. Because the payments are purchased up front as an annuity, the paying party actually pays less than the sum of the payments, as well. The result is generally a win-win situation, with the injured party receiving a steady stream of income over as long a period of time as necessary, while the paying party does not have to worry about making monthly or annual payments. While a structured settlement is not the ideal payment arrangement in all situations where a long term injury settlement occurs, it does work well in many cases where a lump sum payout might be undesirable.
What is a Trust and what are the Benefits?
Trusts are becoming a popular way to structure business and personal affairs. If you are considering using a trust in any way, you should be clear on the legal obligations and the relationships involved. Always make sure you obtain proper advice before setting up a trust. Most lawyers are proficient in this area, but it is still advisable to talk to a legal advisor specialising in this area.
Investing in Structured Settlements
Often some derelict will be awarded some huge amount of money from a noble company due to a run away jury in a Kangaroo Court. Since many times the company paying the money out agrees on a structured over time settlement, the plaintiff of course is a lowly human and has lots of desires for riches and he has little if any cranial capacity to understand the enormous gift the courts have grated him as our nation turns in to a socialist quagmire of re-distributing wealth to those who do not deserve it. Yes a few have been damaged and do deserve something, but usually not. If you disagree with that, you are wrong and I am right.
Structured Settlement as an Investment Vehicle
You always hear people talking about the latest investment vehicle they're using. It's water cooler talk, dinner table talk, phone talk, it's everywhere talk. People are always looking for a way to invest their money that might be a little 'different' from what others are doing. Buying a structured settlement is one of those options.
Have you ever looked around and wondered how everyone is buying houses? Are they really doing that much better than you are? Maybe. Maybe not. Some people have gone deep into debt to purchase a home and are teetering on the brink of financial free fall. Others used creative unconventional financing to afford a home. There may be not-yet discovered risks and consequences to this type of home financing. But there is a fairly substantial group of people who were able to buy a house because they were the recipients of some unexpected or untraditional cash windfall.
Me'Lisa Delaney, 43, is brain-injured as a result of a 1984 medical error that caused a stroke during surgery. The hospital agreed to settle via a structured settlement, as overseen by a county conservatorship.
What is Structured Settlement?
Because it is tailor-made for individual cases, the structure may also include some immediate payment to cover special damages. The payment is usually made through purchase of an annuity from a Life Insurance Company. Subcontractor A trade contractor such as a roofer who usually subcontracts with a general contractor. Subrogation Once a company has paid a loss for which someone other than the policyholder is responsible, it may have the right to recover this loss.
The Cost of Not Having Money
The self-esteem factor of not having enough money is underestimated. You know what I mean don't you? The agony of financially struggling and the ecstasy of financial abundance are dramatically different moments in a person's life. And I for one would choose the abundance over the struggling any day.
Making Backwards Choices
I was reading this past week about a woman who lost 170 lbs in 9 months by eating backwards. She had breakfast for dinner and dinner for breakfast. She lost the weight without leaning on a typical diet plan. Her result, losing 170lbs, has lasted ten years. It's not so much the weight loss that caught my attention, but the fact that she took responsibility for change in her life.
A Revolutionary Fundraising Opportunity -- Life Settlements
Amid fundraisers' growing concerns about the current charitable giving climate, dampened by the erratic stock market and shaky economy, a new fundraising opportunity has emerged ? Life Settlements.
Structured Settlement Factoring
Have you received a structured settlement recently? A structured settlement can be a good thing if you have been a victim of malfeasance, have been severely injured or can no longer physically work. Structured settlements will help you pay bills. But what do you do if you have a structured settlement, which is coming your way and you really have decided that you might prefer to have the cash instead? Well, if this is the case you are in luck because there are companies, which will buy your structured settlement for a discounted price?
Individual Voluntary Arrangements. IVA
What is an IVA?
Structured Settlements Offer Advantages over Lump-Sum Payments
A structured settlement, which offers injury victims cash payments through a long-term annuity as compensation for their damages and medical expenses, offer a number of possible advantages over payment in a lump sum. While the lump sum payment is the traditional way for responsible parties to pay accident claims, the structured settlement offers payments over the span of an agreed-upon period of time. This length of time may span from several years up to the remainder of the life of the injured party, depending on the severity of the accident, the amount of money involved, and the agreement reached between the two parties. Depending on the specific circumstances of the case, structured settlements can have numerous advantages over a lump-sum payment: They are tax free. Thanks to a 1982 change in the Federal tax code, payments on a structured settlement are free of state and Federal taxes. The paying party funds the settlement through the purchase of an annuity which earns the interest to fund the continued payments. This is not the case with a lump-sum payment, which the injured party must invest themselves. Any interest earned on those investments are taxable. They are potentially safer. Most people who come into a large sum of money suddenly find that they are quite popular with long-lost relatives, unscrupulous purveyors of investment schemes, and good, old-fashioned thieves. By receiving payments in substantially smaller amounts, the beneficiaries of a structured settlement have far fewer worries about having others take advantage of them, which could leave them both poor and without adequate medical care. They are simply less trouble. It's difficult enough to adjust to changes in your life if you are seriously injured without having to also take the new responsibility of investing and managing a large sum of money. Not only must you invest the money, but you must invest it wisely, knowing that it must continue to fund your living and/or health care expenses. The regular payments of a structured settlement, along with their tax-free status, simplify day to day living considerably.While they are not ideal for everyone, particularly those who are experienced investors or those who need a large sum of money at once for immediate medical expenses or the purchase of a home, structured settlements can offer a simpler, safer payment solution for many people who are victims of an accident or injury.
When Should You Not Cash Out Your Annuity?
You should not cash out your annuity when it's not in your best interest. Here are 3 reasons it might not be in your best interest; it's too soon, you don't have a good enough reason, it will cost you too much. Every day someone cashes out their annuity or settlement when it might not have been in their best interest. It's an easy mistake to make when the call of money and burden of financial stress is weighing heavily on you. But read carefully and maybe you can avoid digging the hole deeper.
Options for Lawsuit Settlement Winners Receiving Periodic Payments
On January 22,2002, President George W. Bush signed into law a bill that protects individuals who must sell their structured settlement payments to meet unplanned financial needs. H.R.2884Victims of Terrorism Tax Relief Act of 2001 (Signed by the President January 22,2002))
Consider a Structured Settlement?
Structured settlements have been around for a long time however their popularity has steadily increased over the past 6 years. In 1999 only 7% of insurance settlements that were under $7,000 were completed as structured settlements. While we don't have hard data for the current year, the number is much higher now.
Structured Settlements Are Like Ants
Ants are powerful creatures. The powerful ant legs are able to lift 20 times their body weight, and run the equivalent of a man running as fast as a racehorse. Structured Settlements are strong agreements that turn an agreement to pay a plaintiff into an ironclad guaranteed structured award.
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