Individual Voluntary Arrangement (IVA)
An IVA is an alternative to a Debt Management Scheme or Bankruptcy. If an individual is unable to pay their debts in full, then they can propose an IVA to their unsecured creditors and it will release them from all their unsecured debts.
When is an IVA appropriate?
For business people and professionals who wish to continue in their trade, an IVA can be less damaging than Bankruptcy. An IVA can also allow individuals to protect assets such as the family home. Someone with debts over £18,000 who is able to make a lump sum payment, or monthly contributions for 3 to 5 years, may also find it a better option than Bankruptcy.
The IVA process
An IVA is similar to the Company Voluntary Arrangement, but applies to individuals.
It is an agreement for the company to pay a sum of money into a single arrangement for the benefit of unsecured creditors (those who do not hold security over any assets). This could result in up to 75% of these debts being written off by the creditors.
A proposed course of action will be drafted and put to the creditors to vote on. A typical IVA proposal might include an offer to pay a lump sum (perhaps obtained from a remortgage) or monthly payments for 3 to 5 years, or a combination of both. If 75% (in terms of value) of unsecured creditors agree to the IVA then all of the creditors, including those voting against the proposal, are bound by the arrangement.
Once an IVA has been approved, no unsecured creditor can take any further action to recover their money, outside of what has been agreed in the IVA.
A regulated, licensed Insolvency Practitioner (IP) must agree that the IVA is fair to both the individual proposing the IVA and its creditors. The IP will be responsible for ensuring that the IVA is implemented properly.
For further information about IVA'S and other personal debt solutions click here to view our IVA website. www.gbdebtsolutions.co.uk
or call us free of charge on 0800 019 9646
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