January 2008 saw the launch of the IVA Protocol. This is common standard for IVA proposals and terms and conditions.
Prior to 2008 there was no standard proposal format or terms and conditions for IVAs. Each IVA Company and Insolvency Practitioner could produce proposal documents in whatever format they favoured.
The idea behind the Protocol was to introduce minimum standards to IVA proposals which would in turn make them easier to understand and easier for creditors to accept. Standards were set in areas such as the level of fees that insolvency Practitioners can charge and how equity in property should be considered within a proposal.
There are long running discussions about the success or otherwise of the Protocol in terms of whether or not Protocol based IVAs are more readily accepted by creditors or not. However most consumer debt IVAs which involve debts mainly owed to high street banks, credit card and payday loan companies do now follow the Protocol format.
BMD Tip: The IVA protocol is not a legally enforceable standard and Insolvency Practitioners do not have to use it. Despite this it is normally used in cases which involve consumer debts. However most Insolvency Practitioners will still use their own terms and conditions for IVAs involving business debts.
Updates to the IVA Protocol
Since 2008 the IVA Protocol terms and conditions have been updated a number of times. The latest update was introduced in January 2014. The emphasis behind this latest version of the terms and conditions was to make them clearer. However there were also some significant changes to the obligations of people entering into IVAs.
Arguably the most significant change brought in with the 2014 Protocol update can be found in section 9. This is the section which describes if and when equity must be released from property.
Subsection 9.2 now states that the attempt to release equity from the property in month 54 must be made by applying for a re-mortgage or a secured loan. This has perhaps increased the changes that the individual will be able to release equity from their property and so will have to do this rather than falling back on simply extending their IVA payments for 12 months.
BMD Tip: The various protections for users of IVAs which have been put in place still remain such as not having to release more than 85% of the total value of the property and any extra monthly mortgage / secured loan payments not exceeding more than 50% of the monthly IVA payment.
The full IVA Protocol terms and conditions are available here: