At Mums with Debt, we understand the decision to enter an Individual Voluntary Arrangement (IVA) or another debt solution isn’t one that’s taken lightly.

We also understand that getting your head around a legal document when you have a host of other worries on your plate can also be daunting.

Sound familiar? That’s OK.

We’ve helped to guide thousands of people through the process of entering an arrangement by making understanding the proposal just that little bit easier.

Yes, your proposal is a legal document and reads as such, but don’t let that stop you on your journey to regaining financial control.

What is my proposal?

Your proposal is a document that, if approved, may form a legally binding contract between you and the people you owe money to – also known as creditors. The proposal is at the heart of your debt arrangement and can be referred to during the duration of the arrangement to ensure all terms are being adhered to both by yourself and your creditors.

As the proposal is a legal document it is written in a way that may be confusing or hard to understand but in general, it outlines your offer to creditors and sets out the terms of your agreement.

The proposal is prepared by a case officer and an Insolvency Practitioner (IP). It is the responsibility of the case officer to ensure your proposal includes all information about your financial circumstances.

Once you’ve completed your verification call, we send you a welcome pack which helps to explain your arrangement further and your dedicated case officer is also on hand to offer support if you have any questions about what you’re being asked.

What will my proposal include?

There’s no escaping the fact that your proposal is a long document with a lot to understand, which can seem daunting. However, it’s important to read the proposal as signing it means that you agree to all the terms mentioned.

But just what exactly can you expect from your debt arrangement and what does it all mean?

The proposal sets out the terms of your arrangement and will include things such as the length of time you’ll be in the agreement and how much of your debt you will repay. It will also include a full financial statement that highlights how much your creditors are likely to receive.

Here we break down sections of your proposal to help guide you through the process of signing.

Introduction
The introduction of your proposal is straightforward. This is the section where you are admitting that you are unable to repay the debts you owe and that a debt repayment plan like an IVA will provide creditors a greater return than bankruptcy. This section also highlights that Creditfix will manage your arrangement on your behalf and will reference the laws and regulations throughout your proposal.

Nominee and supervisor
This outlines who will be responsible for the management of your arrangement and pledges that the supervisor will monitor and comply with all legislation to ensure the legal running of your arrangement.

Personal details
Your personal details take centre stage in this section of the proposal. It will showcase information about your employment, wages, salary and/or benefits as well as information about debts you owe. This section also includes an admission that you are not able to deal with debt on your own and gives a little more information about your current situation. It’s important you read this section carefully to ensure that we have detailed your situation accurately.

Property/assets/motor vehicles
Again, these sections are straightforward and contain detailed information about your property (if you are a homeowner) as well as information about any assets of value and any motor vehicles you may own and how these may, or may not, factor into your arrangement.

There’s often a worry that you’ll be forced to sell your home or car by entering a debt solution but that’s not always the case. If you’re a homeowner entering an IVA, for example, it’s important to keep an eye out for clause 54 for reassurance that your property won’t be at risk during your IVA.

Pensions
If you are entering an IVA and worried about how your arrangement could affect your pension, this is a section to keep an eye out for. This section states that pensions are typically excluded from IVAs, however, if you receive a lump sum payment during the IVA term it will be included in the arrangement.

Contributions
This is the section of the proposal that outlines how you will participate in the arrangement. It’s important to take note of this section as it is where you agree to the details of your long-term financial commitment. Here you will find the length of your arrangement and the amount you will pay each month based on your affordability.

You will also find information about an annual review, which will require you to take part in a yearly income and expenditure check to ensure your payments remain affordable as well as steps to take if you find it difficult to maintain your payments.

Redundancy
When you enter an arrangement like an IVA, you are signing up for an initial 60-month payment plan. Understandably, a lot can change in that time, including your employment status.

This section offers guidance about the steps to follow if you are made redundant during your IVA term – for example, you will need to contact us within 14 days to inform us of your job loss. It will also include details of what will happen with redundancy pay.

Breach/failure to comply/termination of agreement
There are many ways in which your arrangement can be adapted to your changing circumstances, but you must remember that we can only help you if you keep us informed. If you don’t, you could be in breach of your contract. This section highlights ways in which your arrangement could face a breach or potentially fail – including failure to co-operate and failure to comply – as well as information about how to terminate your agreement.

Fees/expenses/duties of supervisor
It’s important to take note of this section as it outlines the fees that you will pay for your arrangement. The law governing your debt solution provides for us to charge two separate fees in relation to the different elements of your arrangement. These fees are taken from your contributions throughout the duration of your arrangement so you will never need to pay over and above your monthly payments.

General clauses
Understandably, there are some things that we’re required by law to mention in your proposal. This section will include things such as whether you’re subject to certain court proceedings or whether or not anyone has guaranteed any of your debts or contributions.

It also refers to whether you have made certain payments within certain time limits before entering into your arrangement which could be challenged by if you were then made bankrupt.

Distribution
This section outlines when your monthly contributions will be distributed as payments to your creditors. We will make monthly payments to your creditors starting from either 28 days after your arrangement is approved, or the date when the first contribution is received – depending or whichever comes later.
Satisfactory conclusion of arrangement

If you successfully make all of your payments, we will complete the arrangement and all paperwork for creditors and issue you with a Certificate of Completion. You’ll then be free of unsecured debt.
Proposal terms addressing the requirements of SIP3

This part of the proposal confirms that you have been advised of all of the available options to you and that you agree a debt solution like an IVA is your preferred solution.

If you have any concerns or queries about your proposal, we’re always happy to offer further advice. The most important thing is that you’re comfortable with the arrangement you’re signing up for and we’re here to help make that process as simple as possible.

You can contact us and speak directly with a member of the caseworker team on 0800 048 9498.