INDIVIDUAL VOLUNTARY ARRANGEMENT

Individual Voluntary Arrangement (IVA) - A Comprehensive Debt Restructuring Service in Hong Kong

The Individual Voluntary Arrangement, abbreviated as IVA, stands as a prominent debt restructuring option for Hong Kong residents. This service specifically caters to individuals on the verge of declaring bankruptcy due to overwhelming debts, offering them a viable pathway to regain financial stability.

Understanding IVA:

Under Article 20 of Chapter 6 of the Bankruptcy Ordinance:

The debtor, intending to apply for IVA, must have a debt repayment proposal meticulously drafted by both an accountant and a lawyer.
This proposal is then presented to all the creditors involved.

Following the IVA procedures:

The proposed plan undergoes scrutiny at the creditors’ meeting.
A consensus from creditors, representing more than 75% of the total outstanding debt, is mandatory for moving forward.
Subsequent to this agreement, a court hearing takes place, resulting in the issuance of an interim order.
Once this order is in effect, the debtor commits to the repayment terms outlined in the proposal, continuing until the entirety of the debt is settled.

Professional Guidance is Essential:

It’s imperative to highlight the crucial role that the debt repayment proposal plays in the IVA process. This document, which essentially dictates the repayment commitments of the debtor, should be managed with utmost precision. Only certified professionals like lawyers and public accountants, equipped with in-depth knowledge of the debtor’s financial standing and liabilities, are qualified to draft it.

Our team at HKDRS is comprised of seasoned professionals who have successfully navigated numerous debt challenges over the years. We are poised to craft the most apt restructuring strategy tailored to your unique situation. Rest assured, our commitment to transparency means all fees associated with our IVA debt restructuring service are explicitly stated, devoid of any hidden costs.

Should you need further clarification or wish to embark on the path to financial recovery, please don’t hesitate to reach out. We’re here to assist.

Who Should Consider IVA Debt Restructuring?

IVA (Individual Voluntary Arrangement) is a preferred solution for many facing debt issues in Hong Kong. It serves as a respite for those looking for structured debt management without the implications of bankruptcy. Here’s a breakdown of individuals who can most benefit from IVA:

Income-to-Debt Ratio Concerns:

Ideal for individuals with a consistent income source.
Especially beneficial for those whose outstanding debts exceed ten times their monthly salary.
IVA provides a structured plan to manage and eventually overcome such significant debt burdens.

Occupational Sensitivities:

People engaged in professions where bankruptcy can adversely affect their reputation, career progression, or even job security.
Examples include those in banking, law enforcement, legal professions, finance, government positions, and more.
IVA ensures confidentiality, allowing such individuals to address their debt issues discreetly.

Multiple Creditors Scenario:

The IVA framework mandates the involvement of at least three creditors for the debt restructuring process.
This collective approach allows for a comprehensive debt resolution, ensuring all major liabilities are addressed.

If you align with any of the above criteria and are facing debt challenges, an IVA might be the most suitable route for you. Remember, it’s always advised to seek expert guidance before making such decisions. An informed choice can pave the way for a more financially secure future.

Types of Debt Restructurable through IVA (Individual Voluntary Arrangement):

- Credit Card Debt:
  - Arguably the most common type of debt, credit card debt can accumulate rapidly due to high-interest rates. IVA can help consolidate multiple card debts and establish a structured repayment plan.
- Bank Personal Loan:
  - Unsecured loans provided by banks can be managed and reduced through IVA, ensuring manageable monthly payments.

- Finance Company Loans:
  - Loans sourced from non-banking financial institutions, often characterized by higher interest rates, can also be brought under the IVA umbrella.
- High-Interest Loans:
  - Loans that have notably high interest, often from informal sources or due to poor credit scores, can be addressed and restructured with the IVA.

- Credit Union Loans:
  - Though credit unions often offer more favorable terms than other lenders, individuals may still struggle with repayments. IVA can assist in restructuring such debt.
- Student Aid Loans:
  - While student loans typically have lower interest rates and extended repayment terms, some may face challenges in repaying them, making them eligible for restructuring through IVA.

- Tax:
  - Outstanding tax liabilities, including income tax, property tax, or other governmental dues, can be negotiated and restructured under the IVA mechanism.

However, it’s important to note that while IVA covers a wide range of debts, there are certain types of liabilities that may not be included, such as secured loans or mortgages. Also, the eligibility and exact nature of debts that can be restructured might vary depending on local laws and specific financial circumstances. It’s always advisable to consult with a professional or expert in the field to understand the full scope and limitations of IVA concerning personal debt situations.

IVA Debt Restructuring Procedure:

Stage One - Initial Assessment and Proposal Drafting:

Debt Analysis: Debtors begin the IVA process by providing detailed information about their outstanding debts, current income, assets, and other relevant financial details.
Suitability Check: Our company evaluates whether the debtor’s financial situation is suitable for IVA.
Repayment Plan Design: Based on the debtor’s financial status, a tailored repayment plan is crafted.

Proposal Drafting: Professional nominees such as lawyers, accountants, and certified public accountants draw up a comprehensive debt restructuring proposal. This proposal is backed by our company’s extensive experience and a deep understanding of past successful cases.
Contents of the Proposal: The proposal will outline the proposed monthly repayment amount, the tenure of repayments, the interest rate, and essential details about the debtor’s living expenses and personal assets like property, vehicles, insurance policies, etc.
Formal Oath: Roughly two weeks after these initial steps, the debtor must formally swear an oath and then, through a representative lawyer, apply to the court for an IVA interim order.

Stage Two - Court Proceedings and Notification:

Court’s Interim Order: About two months after the initial oath, the court conducts a hearing. If everything is in order, the court will grant an interim order for the IVA case.
Notification to Creditors: Post the interim order issuance, an announcement for the creditors’ meeting is published in both Chinese and English newspapers. Creditors are also directly notified about the upcoming meeting.

Stage Three – Creditors’ Meeting and Implementation:

Creditors’ Vote: During the creditors’ meeting, those present or their representatives can vote on the proposed IVA. For the proposal to move forward, it must gain approval from creditors holding more than 75% of the total outstanding debt.
Implementation of the IVA: Once the proposal is approved, the debtor must strictly adhere to its terms. Monthly repayments are made through the nominee, who then disperses these payments to the respective creditors.

Debtors should note that adherence to the terms of the approved IVA is crucial. Any default could lead to the failure of the IVA and could potentially push the debtor towards bankruptcy. Hence, it’s always advised to stay informed and maintain open communication with the nominee throughout the tenure of the IVA.

Benefits of Applying for IVA (Individual Voluntary Arrangement):

Improved Standard of Living

Through IVA debt restructuring, monthly repayments are typically reduced, allowing debtors to maintain a decent quality of life. They can continue to support themselves and their families without the excessive burden of debt payments.

Protection of Credit Reputation:

Opting for IVA helps individuals avoid bankruptcy, which can severely damage one’s credit score and future borrowing potential. An IVA is a structured repayment agreement that doesn’t reflect as negatively on your credit report as a bankruptcy would.

Quick Application Process:

Significant Reduction in Interest Rates:

Some IVA cases have seen interest rate reductions of up to 80%. This reduction leads to more manageable monthly payments, significantly lessening the total debt burden over time. With reduced financial strain, debtors can more easily navigate their way out of debt and avoid the dire consequences of bankruptcy.

Career and Reputation Protection:

Unlike bankruptcy, which can harm one’s professional standing and jeopardize employment, an IVA allows applicants to maintain their current jobs and reputations. There’s no need to disclose the IVA to employers in most cases, making it a suitable option for those in sensitive occupations, such as finance, legal, and other professional fields. By choosing IVA over bankruptcy, individuals can safeguard their career prospects and future earning potential.

A Fresh Start:

After successfully completing an IVA, individuals get a chance at a fresh financial start. They can rebuild their credit, manage finances more effectively, and move forward without the shadow of overwhelming debt hanging over them.

In summary, while debt is undoubtedly stressful, an IVA provides a structured and systematic way to address financial challenges. With professional guidance, it’s possible to navigate this path effectively and set oneself up for a more stable financial future.

*** We provide free professional analysis and consultation for IVA fee.

And your personal information provided will be kept confidential ***

INDIVIDUAL VOLUNTARY ARRANGEMENT