In the last article we discussed about formal and informal debt solutions to avoid bankruptcy. However, if you are already made bankrupt, FTVA or a Fast Track Voluntary Arrangement can be the solution to avoid bankruptcy.
FTVA is a special agreement with your creditors to clear your debts after you have been made bankrupt. This has been introduced to help debtors to avoid bankruptcy horrors in UK.
You need to keep certain things in mind while working out an FTVA:
- The FTVA proposal must have details of your debts.
- You must list down your assets that are available to be sold
- When can you finish making your repayments?
- Fees and administration costs of FTVA.
FTVA or Fast Track Voluntary Arrangement Process:
In a FTVA, the Official Receiver plays the role of a nominee. He drafts the FTVA proposal to present to your creditors. If the proposal is accepted, the Official Receiver supervises the entire procedure and pays your creditors accordingly.
Once your creditors accept the FTVA proposal, the Official Receiver will immediately apply to the court to remove the bankruptcy order. This will be executed after 5-7 weeks from the starting date of FTVA. After your bankruptcy is removed or annulled, you will be free from bankruptcy restrictions. Even your bankruptcy details will be removed from the Insolvency Register.
Differences between an IVA and FTVA:
An IVA is used as an option to avoid bankruptcy. On the other hand you can resort to FTVA only when you have been made bankrupt and want to come out if it. An FTVA mainly deals with sales and disposals of your assets as well as collecting regular payments. The Official Receiver will act more like a supervisor in an FTVA. You can also make some extra offerings to your creditors while proposing an FTVA.
What are the costs for an FTVA?
You will be charged a fixed fee of £300 by the Official Receiver for acting as a nominee. You will have to make this payment when you propose an FTVA. There can be a situation where the Official Receiver may not agree to act as a nominee. In that situation, the fee will be credited to your bankruptcy estate.
Once your creditors accept your FTVA proposal, the Official Receiver’s fee will be 15% of the amount collected from your assets or collections made from you. Even the administration costs are recovered from the money collected. If your bankruptcy was a result of the petition made by your creditors, you will have to repay their costs. Apart from this, there is a fee of £35 for registration of an FTVA with the Secretary of State.
Making an FTVA proposal:
If you want to propose an FTVA, you will have to inform a member of the Official Receiver’s (OR) staff. After this you will be given some forms to complete. This form will represent your proposal. It will include several standard terms and conditions as well as details of your assets and debts you owe.
After providing all the extra information, you will have to return the form to the Official Receiver along with the fee. For more assistance you can obtain a guidance on ‘Completing your FTVA proposal’ from any OR office. Once you have submitted your proposal, the Official Receiver will decide on whether he should act as a nominee. The Official Receiver acts as a nominee only if he is satisfied that your FTVA proposal stands a chance of being accepted by your creditors.
If the Official Receiver agrees to act as a nominee, he will send a copy of the proposal to your creditors for their vote. It is important to ensure that you inform the Official Receiver about all your creditors. If you forget to name a creditor, that creditor can easily revoke an FTVA once he knows about it. It is mandatory that at least 75% of the creditors vote for FTVA proposal. Once approved, your FTVA will be supervised by the Official Receiver and he or she will realize your assets, collect payments and finally pay off your creditors.
The duration of an FTVA is set out in the proposal. There is a fixed time limit for FTVA. While you are in an FTVA, you must keep up your payments and deliver your assets accordingly. If you fail to do so, the Official Receiver can make you bankrupt once again. In case you are made redundant and fail to make payments, the Official Receiver will call off the FTVA and will not take any action. So it is advisable to get help from a solicitor, a qualified accountant, an authorized insolvency practitioner or a reputable financial adviser or advice centre before you go for FTVA.
