What is an 'Interim Order'?
An Interim Order, in the context of the Individual Voluntary Arrangement process, is a Court Order that forces creditors to stop legal action for the enforcement of unsecured debts, and prevents the execution of distress warrants and other enforcement measures without the Court's permission.
Once the Interim Order is lodged in Court the effect is immediate.
The IVA applicant is protected from that moment against the commencement or continuation of any legal action by their creditors for a set time period, usually till just after the date of their Creditors' Meeting.
Who Might Need An Interim Order?
Anyone who is being pursued aggressively by their creditors, yet intending to apply for an IVA, might consider applying for an Interim Order.
It's true to say that most creditors are now very familiar with the IVA process and appreciate that an Interim Order could be used to block any legal action they might take, so most creditors will accept the IVA process, without too much resistance.
But, occasionally, a creditor will have progressed legal action beyond a certain point and favour continuation, rather than calling a halt to proceedings.
In these circumstances, an Interim Order becomes extremely useful to the Insolvency Practitioner, particularly when a bankruptcy petition or a Statutory Demand has been served, or when a creditor is seeking to secure a Charging Order.
When would I apply?
When you apply for an IVA there's a legal requirement to give all creditors a minimum of 14 days notice of an impending Creditors' Meeting and during this period you're not legally protected by the IVA.
It is only after the IVA has been accepted at the Creditors' Meeting that it becomes legally binding and able to protect against any legal action. Hence the possible need for some interim cover.
Your Insolvency Practitioner will be best placed to advise on when to apply, but rest assured, once the Interim Order is in force, the IVA process can continue on towards the Creditors' Meeting without threat of further action being taken against you.
How do I apply for an Interim Order?
To apply for an Interim Order you must not have had a previous application within the past 12 months and you must not be an undischarged bankrupt.
An Interim Order can be applied for by the IVA applicant at their local County Court, however, preparation is needed before an approach is made to the court.
In order to apply, your Insolvency Practitioner must prepare your IVA proposal, the legal document that outlines details of your offer to your creditors.
The proposal must be a viable offer and stand a reasonable chance of being acceptable to creditors if the application is to be taken seriously by the Court.
Once you're armed with your proposal, you can make your application.
Is there a charge?
At time of writing, the Court fee stands at £180 for each IVA proposal, i.e. an Interim Order application for a joint IVA would be £360.
It's for this reason that many Insolvency Practitioners will only suggest applying for an Interim Order when there's a real threat of bankruptcy.
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