IVA Individual Voluntary Arrangement/ Debt Restructuring

Under section 20 of the Bankruptcy Ordinance, Chapter 6, Individual Voluntary Arrangement (IVA) is an alternative option for people facing bankruptcy. The debtor will appoint a proxy to propose a suggestion of the debt repayment to his creditors, which will be subject to a court hearing, a provisional order, and the approval from the creditors, to ensure that the debtor can properly settle the debt problems without reasonable burden. The appointment of an experienced proxy to deal with the debt restructuring arrangement is crucial to the success of the whole application. Previously, the IVA representatives were held by the Official Receiver of the Official Receiver’s Office. Since September 2002, those with qualifications and experience recognized by the court to be competent to deal with debt restructuring are certified public accountants.
All information of the clients will be handled by licensed lawyers/accountants with 100% confidence.

Application qualification

IVA is suitable for:

Debt holders with stable income and owe debts of more than 10 times their monthly salary;
Debt holders engage in sensitive occupations and are unable to file for bankruptcy.

IVA may restructure the following liabilities:

Credit card outstanding loans | Private bank loans | Finance company loans | “Single amount clearance” High Interest loans | Credit Union loans | Student Aid loans | Tax | Business loans

Further confirmation of application eligibility

Application procedures
Estimated time(from the date of application)

Phase 1

Each debtor brings about all his or her debt and income data for IVA debt restructuring, consulting and analysis. Upon our acceptance to process, the proxy UnionUs accountant will formulate a reimbursement proposal (no charge of fees if unsuccessful). Based on our rich experience, we will also make a balance of interests between the creditors and the debtors to write the debt restructuring proposal. In addition to the suggestions of the monthly payments of the debt, terms of repayment, interest rates, it also indicates the living expenses of the applicant. The applicant’s assets such as self-occupied property, cars, insurance and/or pensions and so on will also be clearly disclosed.

On Day 1

To make an oath of the application, the provisional order application with be submitted by the representative solicitor to the court for filing.

In about a week

Phase 2

Court hearing (represented by a solicitor, no need for the applicant to appear in court), to issue an IVA Provisional Order

In about 2 months

Publish the meeting notice of the creditors (in a Chinese and an English newspaper respectively )

In about 2 months

Publish the meeting notice of the creditors (in a Chinese and an English newspaper respectively )

In about 3 months

Phase 3

To pass the resolution by a majority of the creditors who are present to vote or their representatives (that is, accounting for more than 75% of the total value of the debt held by the creditors who are present to vote). The debt restructuring process will then be carried out; the monthly repayment will be made on time; and then the repayment will be arranged by the representative to the creditors.

The pressure of the debt is immediately reduced.

IVA Debt Restructuring/IVA will not only reduce the financial and psychological burden, but also avoid damaging credit reputation and affecting work. You only need to submit all the documents, and you will be arranged to take the oath at the solicitor’s office within 1 day. We will inform the creditors (such as banks and finance companies and so on) the next day. Most of the creditors will immediately cease chasing after the debts while the monthly repayments will at once be relieved.

The court orders the settlement to save interest

IVA is done through the authorized legal representatives and authorized accountants. With the rich experience of UnionUs in debt processing, a new repayment plan will be proposed to the court and the creditors according to the personal income and financial situation of the debtor. The court will then make an order, and convene a meeting of the creditors to conduct a negotiation of the plan. After reaching a new repayment agreement, it enables the debtors to pay off his debts completely in accordance to the new plan. Generally, the repayment interest can be reduced by 70% compared with the original, so as to avoid bankruptcy and let debtors start a new life again.

Protect your living qualities without going bankrupt.

As insolvency (bankruptcy) will damage the credit capacity and reputation of the debtors. As it is more likely that the debtor will lose his or her job, especially in occupations involving the handling of financial property, professional qualifications, authorizations or public services, IVA is the best alternative to people in these categories of work.

Benefits of debt restructuring

Avoid the stigma of bankruptcy.
Free from restrictions such as those under the Bankruptcy Ordinance and no status or records of bankruptcy.
Significantly reducing interest payments to banks.
No need to notify the employers or family.
The process takes less time than insolvency proceedings.
Fixed interest and fixed amount of repayment.
Stop immediately the collection for debts from the creditors.

Frequent question of IVA

1. How long does the process of applying for IVA take?

Generally speaking, it takes about three months from signing the documents, taking the oath and being scheduled to appear in court until the meeting with the creditors. The whole process will be followed up by our accountants and lawyers to protect your privacy.

2. Will his/her employer or family be notified when he/she has completed the IVA?

Notification is not required for the vast majority of occupations, except for some employees of institutions regulated by the Monetary Authority or the disciplined services, such as banks/police. Family members will not be notified of a debt restructuring application.

3. Can I apply for IVA if holding a property?

Generally, the bank only requires the debtor to sell the property of positive equity to reduce the amount of debt. The majority of people with negative equity and owners in need of land premium will not have their properties affected.

4.Can self-employed persons apply for IVA?

Any employed persons can of course apply for debt restructuring. For self-employed persons, as long as they can provide reasonable proofs of income, they will also meet the basic requirements for debt restructuring.

5. Does the debtor need to continue paying the outstanding loan to the creditor during the processing of IVA application?

Most creditors, on receipt of a notice for restructuring, are willing to pay concerns on the situation of the debtors and to defer payment until a meeting of creditors has been completed to negotiate a new repayment plan.

6. How can an IVA application be formally approved in accordance with the law?

Under the Ordinance, a debt restructuring proposal by a debtor can only be formally approved with the consent of the creditors representing 75% or more of the total amount of debt owed.

7.Can I make new loans during the IVA contribution period?

The debtor should not borrow any more money during the IVA contribution period and usually, the loan application will not be accepted by the bank or financial institution.

8. How is the fee for IVA calculated? Can I pay by installments?

Our methods of the charge of fees are simple, transparent and reasonable. Please refer to “IVA Debt Restructuring Fees “. In addition, our fees are to be collected by installments.

9. Is there any charge for consulting IVA process?

We guarantee no charge for unsuccessful cases. The fee agreement will not be signed until you decide to entrust us to act as your representative and decide that our accountant will draft the repayment plan on your behalf.

10.What should be done in case of unemployment or salary reduction during the IVA contribution period?

Please contact us if you encounter unemployment or salary reduction during the contribution period, because IVA contributions are made by a mutual agreement. However, if the debtors want to suspend or reduce their contribution, they must produce substantial documents and with the consent of the creditors.

11.Can we search the relevant records from the High Court on its website?

Yes.

12.What is the difference between IVA, DRP and IDRP?

IVA debt restructuring – consolidation of the debt, a reorganization plan subject to the processing through the court, generally suitable for a large amount of debt and a high proportion of debtors.
DRP Debt Relief Program – Negotiate new repayment plans with individual creditors, not subject to court proceedings. The costs are relatively low but not every creditor will accept a debt relief request.
IDRP Comprehensive Debt Relief Program – is a debt restructuring program that negotiates a new repayment method with the debtor’s largest creditor. In the whole process, as long as the largest creditor is willing to accept the debtor’s repayment plan, and that the other creditors have no objection, the largest creditor will consolidate all the debt of the debtor.