Debt Restructuring (IVA DRP IDRP)
We understand that not everyone may not want to enter into bankruptcy to resolve their financial troubles. There are in fact, other alternative solutions such as Individual Voluntary Arrangement, Debt Relief Plan and Interbank Debt Relief Plan which you may consider:
Individual Voluntary Arrangement (“IVA”)
What is IVA?
IVA is a formal and simple procedure to repay your debts which consists of:
1) Our solicitor will draft a re-payment proposal which suits the debtor’s circumstances best for the creditor’s approval which shall be submitted to the Court for an interim order;
2) Once the Court has made an interim order, a creditor’s meeting will be held whereby the creditors may vote for/against the re-payment proposal. If the re-payment proposal is approved by more than 75% of the creditors in value, the re-payment proposal will be effective from the date of the creditor’s meeting;
3) The outcome of the creditors meeting regarding the re-payment proposal will be submitted to the Court thereafter; and
4) Once submitted to the Court, it will be binding upon all the creditors and the debtor.
Who can apply for IVA?
Any debtor with stable income and overwhelming debt or with occupation that prohibits bankruptcy may be eligible for IVA.
What types of debts are covered under IVA?
Debts covered under IVA may include:
– Credit card debts
– Personal loans granted by banks
– Loan at financial institutions
– Loans with high interest rates
– Credit Union
– Grant and loan
– Tax debts
Debt Relief Plan (“DRP”)
What is DRP?
DRP is an informal agreement between the debtor and its creditors. It is a simplified version of IVA and does not require any legal procedures.
A debtor may directly negotiate with the creditor(s) to discuss and reach a compromise on repayment of the debts.
This is usually a less costly procedure, however the Court may not recognise this informal agreement legally binding on the parties. As a result thereof, your creditor(s) may ignore this informal arrangement and demand re-payment of debts in full.
In spite of the informal nature of the DRP, however, debtors may find this alternative solution more suitable if:
– The debtor wants to retain high control over the negotiation process of their repayments
– The debtor wants to continue maintaining a reasonable standard of living without going bankrupt
– The debtor is working in a sensitive industry such as the financial industry or government sector involving disciplinary services and therefore, do not want to disclose their application which may affect their reputation
Interbank Debt Relief Planning (IDRP)
What is IDRP?
IDRP is different from IVA and DRP. It is a method of debt restructure arrangement with the major creditor taking over all the large and small debts. No legal approval is required. The debtor only needs to make payment directly to the creditor according to the agreed debt re-payment schedule.
The procedure for IDRP involves:
1) Our solicitors will negotiate directly with the major creditor on the debtor’s behalf;
2) The proposal will be submitted to the major creditor and other creditors concerned;
3) The major creditor will unify all the debts after agreement are obtained;
4) The debtor only need to make monthly repayment of the agreed amount to the major creditor with the fixed principal and interest as stated in the final IDRP repayment Schedule.
Who can apply for IDRP?
Debtors with more than one creditor or with occupation that prohibits bankruptcy or where the concerned debt is less than HKD100,000, but at least ten times of the debtor’s monthly salary
Whether you are a student, professional, business owner, homemaker, we believe that with our expertise, we can help you find the right solution to resolve your financial problems!