Failed Individual Voluntary Agreement

Failed Individual Voluntary Agreement

A failed individual voluntary agreement is a serious matter. If you are in an individual voluntary agreement, and you are not able to continue making your payments then you are going to be involved in a failed individual voluntary agreement. You must realize that the agreement was drawn on the basis of a proposal by you, the debtor, regarding your ability to make your monthly payments.

Individual voluntary agreement - change in circumstances

However, circumstances can change and this can result in a reduction in the debtor's income which would cause problems to them in making their payments. In such a case, the best course of action is for the debtor to call their creditors to explain the changed circumstance and then the debtor must ask the creditors to reconsider the original offer.

Job loss, etc

Circumstances can change on account of several factors including loss of job and breakdown in a personal relationship as well as illness and having a baby or even changing your job. These changes in circumstances can easily cause a failed individual voluntary agreement.

Two missed payments

The good news is that under the terms of your individual voluntary agreement you can miss not more than two payments. As long as you do not miss more than two payments, you will not be at risk of being involved in a failed individual voluntary agreement. However, even if you have not missed more than two payments you will still require the permission of the Supervisor and also that of your creditors.

Furthermore, if you get involved in a failed individual voluntary agreement and you also do not get in touch with the Supervisor then you will be considered as having defaulted on your individual voluntary agreement. The upshot of such a failed individual voluntary agreement is that you can become involved in a bankruptcy.

If you are in a failed individual voluntary agreement then the creditors have the right to petition for the debtor's bankruptcy. Even the Insolvency Petitioner can, in a failed individual voluntary agreement, petition for the debtor's bankruptcy. If the Insolvency Practitioner petitions for the debtor's bankruptcy then they need to have set aside sufficient funds to make this petition.

Once the bankruptcy petition has been presented and the debtor risks having their assets seized. In such a case, the debtor must obtain expert advice about how to protect their assets. One solution is to go in for a Debt Management Plan or you can also make an informal offer to pay the creditors. It is important to take every measure possible to prevent a failed individual voluntary agreement.

This means that at the very outset, when making the proposal to your creditors, you must cater for changes in circumstances during the life of the individual voluntary agreement. It is always a good idea to set aside some funds which can be used in case there are radical changes to your circumstances. The money that you have set aside as a backup will help you to continue paying your monthly payments and in this way you can prevent a failed individual voluntary agreement.

Back to Top