Locally to where I am based in the UK, it seems that fast-track VA's (FTVA) are fast becoming a common part of the bankruptcy scene.
So what is an FTVA?
It's a legally binding agreement made to your creditors to pay all or part of the money you owe them back. You can only enter into a Fast-Track Voluntary Arrangement following a bankruptcy hearing.
How do I arrange an FTVA?
The Official Receiver, whom you'll have had some contact with during your bankruptcy procedure, will put the proposal together and present it back to your creditors. They charge a fee to do this. The costs are a one-off fee of £300 to the Official Receiver plus a one-off fee of £35 to register your Fast-Track Voluntary Arrangement on the DTI register of Individual Voluntary Arrangements (IVA register). In addition to these fees, the Official Receiver will also charge 15% of all monies realised.
Are there any other costs for an FTVA?
Before any money is paid over to the creditors, the Official Receiver will also collect half of the case administration fee which at the time of writing is £812.50. This is recovered from any monies that the Official Receiver has already collected.
In addition to this, if one of your creditors forced you into bankruptcy then you must also pay their costs.
Why are FTVA's popular in the UK?
Well in a nutshell, it annuls the bankruptcy order made against an individual. This means that the bankruptcy is removed from the records. For the bankruptcy to be annulled the Official Receiver will apply to the court on your behalf. This usually takes up to 8 weeks from the date that the Fast-Track Voluntary Arrangement started. It's similar to an IVA in the UK, except an IVA is normally used to avoid bankruptcy and the nominee for a Fast-Track Voluntary Arrangement has to be the Official Receiver.
What about my Bankruptcy Restriction Order (BRO)?
Once the bankruptcy order has been annulled then you are no longer bound by the bankruptcy restriction order. Any assets that do not form part of the Fast-Track Voluntary Arrangement will be returned to you (usually a house but sometimes there are other assets too).
Who tells my creditors that I am no longer a bankrupt?
The Official Receiver will write out to anyone they notified of your bankruptcy and inform them that you are no longer a bankrupt. This can be further verified by the creditors as the details of your bankruptcy will be removed from the insolvency register.
Why doesn't everyone just get an FTVA?
Well the proposal has to show some reasonable returns to the creditors in order for it to be agreed. The proposal will consider the amount of your debts, any assets available to be realised, any disposable income you have available and how long the payments will be maintained for. The real crux of the issue is to have some disposable income available or assets that can realise a return of payment to the creditors.
Do all FTVA proposals get accepted?
No. The proposal is simply that, a proposal to repay your debts to get out of bankruptcy. The creditors still get to vote on whether to accept the proposal or not. 75% or more by value of creditors must agree to the proposal for it to be accepted. If a proposal is not successful then the £35 fee for registering the Fast-Track Voluntary Arrangement on the DTI register of Individual Voluntary Arrangements (IVA register) is returned to your bankruptcy estate. This may be returned at a later date.
What happens if I miss payments in my FTVA?
If you have deliberately missed payments even though you can afford them then the Official Receiver will terminate the Fast-Track Voluntary Arrangement and make you bankrupt again. If there has been a change in circumstances and you can no longer afford the agreed payments then the Official Receiver will terminate the Fast-Track Voluntary Arrangement but will take no further action.
A final word on FTVA in the UK
Now, I do believe that Fast-Track Voluntary Arrangement has its place but I also think that there could be more done to understand that there are other options for getting out of debt BEFORE a person goes bankrupt. Getting the right debt help and advice is essential. Look at the advantages and the disadvantages for each solution you consider for debt resolution and then make a more informed decision.
There are more options for getting out of debt trouble then most people realiseIf you would like to know what the 6 solutions to debt in the UK are then you can get debt help and advice from Ed Pearson at Debt Dr.
Ed Pearson is a Debt Dr. Debt Dr specialise in debt help and advice for individuals and small businesses. Ed can be contacted on 0845 123 4000 or in confidence on 07970 659266.
http://www.debtDr.co.uk 'prescribing life without debt'
This article does not constitute regulated advice. Please remember that any action regarding financial advice should always be taken only after considering the specifics of your own situation.
To find out more about Ed try, http://www.advice4debt.co.uk/debtquiz.htm
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