Application for Debt Restructuring
- Debt Restructuring (IVA), known as Individual Voluntary Arrangement (IVA) in Hong Kong, must be applied for through legal procedures. The reason for applying for an IVA is that the debtor is unable to repay the loan according to the original loan terms, and therefore hopes that the creditor will take into account the debtor’s financial situation and draw up a series of debt restructuring plans with the creditor, including reducing the interest rate of the original loan or re-drafting the loan repayment period.
- The biggest advantage of applying for IVA in Hong Kong is that the interest rate in Hong Kong is relatively low. If you are on the verge of bankruptcy, the debt restructuring may be more suitable for you.
The Benefits of Debt Restructuring
A professional accountant (nominee) will draft a repayment proposal and submit it to the court, a legal representative will appear in court and the court will issue an interim order. One month after the issuance of the provisional order, a professional accountant (nominee) will convene a creditors’ meeting with all creditors of the applicant to discuss a unified repayment plan for all creditors, reduce interest and reduce the monthly burden (most of the IVA repayment plan, the monthly repayment amount is 45%-50% of the monthly salary, the maximum tenure is generally 84 instalments, in some special circumstances up to 96-120 instalments). depending on the creditor])
Understanding the benefits of debt restructuring
Eligibility for Debt Restructuring
When it comes to unaffordable debts, bankruptcy is the first solution that comes to our minds. Bankruptcy is not only a lifelong stain on a person but the debtor also has to endure a few years without having a luxurious lifestyle defined by the bankruptcy officer, such as taking taxis, travelling at one’s own expense, etc.
Admittedly, there are many constraints on the debtor as if he or she is living in an invisible prison. For professionals, such as teachers and members of the disciplinary forces, filing for bankruptcy even carries the risk of having their licenses revoked or disqualified. Debt restructuring definitely gives a ray of hope to the debtors.
The debtor shall appoint a nominee to make a proposal to his creditors for the repayment of the debt, which shall be approved by the creditors after a court hearing and an interim order, to ensure that the debt is properly settled at reasonable cost to the debtor.
Eligible for application by the debtors that meet the following criterias:
Required information for Debt Restructuring:
Full range of integrated services Up to five years of follow-up service
Frequently Asked Questions (FAQs)
Frequently Asked Questions on Debt Restructuring
Debt rescheduling can immediately stop the increase in amount of debt. The creditor will no longer raise the interest he principal so that the debt snowball an be avoided. The debt will become reyable for the debtor. If the debtor has multiple debts, such as credit card debts, personal loans, etc., he or she can apply for debt restructuring and consolidate them into a single payment, which can be paid by monthly instalments according to his or her repayment abilities, thus reducing his monthly burden.
The court will create more communication opportunities for debtors with multiple creditors by ordering a meeting of creditors to review the repayment arrangements for the debtors. The repayment arrangement is based on the principle of the minority submitting to the majority, and only requires the consent of 75% of creditors for the approval of the repayment proposal.
IVA is an abbreviation of individual voluntary arrangement. Originated from the Bankruptcy Ordinance, IVA is a solution for debt restructuring which provides a new way of handling debts other than bankruptcy. The law is intended to give debtors the opportunity to avoid bankruptcy through debt restructuring via IVA.
It is difficult to instantly determine whether you are suitable for IVA, so your case must be further analyzed based on the details of your financial situation.
In our previous IVA cases, the applicants were from all walks of life There are civil servants (including disciplined services or civilian staff), staff of public organizations (e.g. HA), professionals (e.g. insurance agents, nurses, doctors, engineers, architects) and clerks, secretaries, and so on.
No. This is fine as long as more than 3/4 of the creditors (not the number of creditors) agree to the repayment proposal.
Yes. Any IVA approved by the creditors’ meeting (creditors’ meeting) can be viewed in the special register of the Insolvency Service.
A debt restructuring IVA has a wide range of fees and charges; it is possible to pay the fees in instalments.
- Accountants and lawyers analyse your case (including your income and expenses, assets and liabilities) and accept that you can have an IVA.
- Court fees need to be paid on application for an interim order
- Fees for publication of a newspaper notice of a creditors’ meeting need to be paid prior to a pending creditors’ meeting
Certain nominees and solicitors accept partial payment of fees by instalments, and professional fees (solicitor’s fees) are included in the repayment proposal in light of the debtor’s ability to agree a method of payment so that the debtor does not have to worry about it.
When an application for an interim order is to be filed with the court, the debtor is required to pay a fee to the court based on the amount of debt owed. Please find the calculation as follows.
- 1.5% for every HKD 1,000 or part thereof of the first HKD 100,000 0.75% for each HKD 1,000 or fraction of HKD 1,000,000 up to HKD 100,000
- For example, if the debt is HKD 200,000, the court fee is: HKD 1,500 + HKD 1,425 = HKD 2,925.
- Other miscellaneous expenses are accountable expenses, such as photocopying fees, newspaper notice publication fees (about $2000) and other fare except for the publication of the newspaper notice, and the amount shall not exceed HKD 2000.
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