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Individual Voluntary Arrangement (IVA) – What does it involve?

An Individual Voluntary Arrangement (IVA) is the technical term for a procedure that allows an insolvent client to come to a legally-binding arrangement with creditors (usually non-priority creditors) to repay her/his debts in part or in full. The IVA was established by and is governed by Part VIII of the Insolvency Act 1986 and constitutes a formal repayment proposal presented to a debtor's creditors via an Insolvency Practitioner. Usually (but not necessarily) the IVA compromises only the claims of unsecured creditors, leaving the rights of secured creditors largely unchanged.

The History Of IVA’s

IVA's were originally designed to provide relief to debts generated as a result of business insolvency. In recent years, increasing levels of consumer debt has led to many insolvent individuals with non-business generated debts seeking a debt solution.  IVA’s are a perfect debt solution if you have assets and need to protect them whilst your dealing with your debts.

When Can You Apply For An IVA?

  • A client who is insolvent and who is not already bankrupt can approach an Insolvency Practitioner for assistance.

  • A client may often decide to take this step when a creditor is threatening to make her/him bankrupt and s/he has received a statutory demand.

  • Proceedings which can lead to an IVA can be started provided that the client has not started similar proceedings within the previous twelve months.

  • There are no limits about the amount of debts or assets a client can have before applying for an IVA.

An IVA is generally only appropriate if the client:-

  • has an income which will allow regular repayments;

  • has a business or home (or valuable assets) that s/he does not want to lose

  • wishes to co-operate with creditors to resolve the debt problem.

IVAs are useful where a creditor is threatening bankruptcy but the social and economic effects of this would be undesirable for the client. For example, this could be where the client was hoping to continue running her/his business or is in a profession or job which which precludes you from going bankrupt and keeping that job (for example a director of a company or an Accountant or solicitor. In these circumstances, the IVA may offer the client a good chance of saving the business and/or home.

Bankruptcy is very likely to be more useful than an IVA if the client has multiple debts, no property or no equity in her/his property, no income and no likelihood of these factors changing.

The advantages of an IVA are:-

  • That an IVA for a client who is self-employed will usually benefit a creditor more than bankruptcy would do because a business will continue to generate profits for the benefit of the creditor

  • These days, if there is still any stigma associated with bankruptcy then an IVA avoids such stigma. However, in modern society it is very doubtful whether bankruptcy still carries the stigma it once did and these days notification of bankruptcy in the local press rarely occurs either. (Since April 2009 bankruptcies are no longer advertised in the press unless they it is in "the public interest"). However, an IVA avoids all risk of any such possible stigma and guarantees that there will be no statutory advertisement in the local press.

  • It may be possible for the client or IP to negotiate with creditors for some assets not be included in the scheme, though only personal possessions whose realisable value is small are likely not to be included. Bigger assets, such as the home, may be excluded from the scheme, if there are strong reasons

  • The client may still be able to get credit on personal household goods and services, or even, if s/he is self-employed, for business goods and services. S/he may also be able to remortgage her/his home

  • Some of the problems which may arise when going bankrupt are avoided, for example, the client may avoid losing her/his home. However, the client could face these problems with an IVA if the creditors vote to include these restrictions in an IVA or where the property is revalued towards the end of the IVA term.

  • An agreement may be reached limiting the liability for interest

Creditors who do not agree with the scheme will be bound by it if the majority vote to agree at a creditors meeting. Bare in mind that 75% of the total amount of debt must agree to the proposal that is being submitted. Providing that amount agree to the proposal then the remaining creditors will be bound by the arrangement and force to accept the terms of the IVA agreement. Creditors cannot then take further action against the client if the client complies with the requirements of the arrangements

Why Go Through An IVA With Moneymeans?

Our team of impartial debt advisors will not put any clients through a solution that is not right for them. As we are not JUST IVA specialists and we deal with all different debt solutions IN HOUSE we can give you the best advice in the market. Other companies are not "whole of market" so normally have a vested interest in persuading a client into their main specialist solutiion only without considering alternatives. With Moneymeans there are:-

  • No Hidden costs or legal jargon to decipher (we will explain everything to you)

  • Constant updates on how your debts are decreasing.

  • An invitation to your meeting with the creditors

  • Your own debt advisor to steer you through your insolvency

  • You can come and see your insolvency practitioner and discuss your queries at any time*

CALL TODAY on 08432 899051 for free information !!

*Appointments must be booked in advance – subject to times and availability.