1. Q: What is “Individual Voluntary Arrangement”?
A: The Bankruptcy Ordinance provides for an Individual Voluntary Arrangement (IVA) as an alternative to bankruptcy. Application for IVA may be made by a debtor who has a problem with debt repayment or an undischarged bankrupt. It involves application to the court for an Interim Order during which no bankruptcy petition or other legal proceedings may be taken or continued against the debtor. The debtor is required to make a repayment Proposal to the creditors which, on approval, is binding on all creditors.
2. Q: What are the advantages of IVA?
A: For a debtor, through IVA, he/she can avoid the stigma of bankruptcy, be free from the legal restrictions provided for under the Bankruptcy and other Ordinance and be able to retain his/her job/profession. For the creditors, as compared with bankruptcy, they may expect better repayment from the debtor as the latter would have more incentive to make repayment.
3. Q: Who can be a Nominee?
A: The debtor must find a person who is prepared to act as Nominee for him/her in relation to the IVA. That person should, in the opinion of the court, have suitable experience and qualifications to perform the duties as Nominee (usually accountant or lawyer).
4. Q: What is the fee for IVA?
A: The debtor is required to deposit with the Nominee an initial sum of $12,150 to cover the fees, expenses and remuneration to be incurred by the Nominee in connection with the work done by him in respect of the voluntary arrangement.
5. Q: Is the IVA (Personal Voluntary Arrangement Scheme) a loan?
A: No, the IVA (Personal Voluntary Arrangement Program) is a new repayment scheme negotiated by the nominee as a representative, and the interest and contribution of the new scheme is relatively low, making the repayment of debt easier.
6. Q: For debtors who are unable to pay the debt, is applying for bankruptcy the only solution for the debt problem?
A: No, you can apply for IVA (Individual Voluntary Arrangement Program) and negotiate with the creditors for a new repayment method to resolve the debt crisis without going bankrupt.
7. Q: Can the debtors apply to the court for IVA (Personal Voluntary Arrangement Scheme) in dealing with the private loans owed to financial companies and student grants and taxes owed to government?
A: Yes, unsecured debts owed to banks, financial companies, government and student funding offices can be covered under the IVA (personal voluntary arrangements plan).
8. Q: Can debtors apply for IVA (Personal Voluntary Arrangement Program) in the High Court without legal representation?
A: No, because the application for IVA (Individual Voluntary Arrangement Scheme), in addition to making an application to the High Court, requires appointing a certified public accountant to handle and supervise future repayments. Also, debtors have to be represented by solicitors on their behalf in applying for a temporary court order (Interim Order). The legal representation by solicitors is necessary in the application for IVA.
9. Q: Does the debtor need to report to his / her employer about the application for IVA (Individual Voluntary Arrangement Plan)?
A: Most industries do not require the disclosure of IVA application to the employers. Please note that debtors working in banks, financial companies or financial institutions need to inform the employing agency.
10. Q: Does the debtor need to continue to contribute to the bank and the financial institution during the period of applying for the IVA (Personal Voluntary Arrangement Scheme)?
A: After the submission of relevant documents by the solicitors, payment to most banks and financial institutions may be suspended until the completion of the application procedure.
11. Q: Will IVA (Personal Voluntary Arrangement Plan) have an impact on an individual’s credit ratings?
A: During the repayment period, the debtor cannot borrow through any means. After the full settlement of the debt, the debtor may inform the credit rating database, and the score of the debtor will be re-calculated.