IVA Guide
What is an IVA
IVAs were introduced by the government in 1986 as an alternative to bankruptcy. IVAs are also known as an Individual Voluntary Arrangements.
An IVA is a formal agreement between a debtor and creditor. It enables the debtor to come to an arrangement with his/her creditors whereby only a percentage of the debt will be repaid over an extended period of time via small monthly repayments.
After the percentage of the debt (often as little as 25%) has been paid of by the IVA, the debt is deemed to have been cleared.
Why is an IVA Preferable to Bankruptcy
It is in the interests of both the debtor and creditor for bankruptcy to be avoided if possible.
IVAs from The Debtor's Perspective
An IVA is a much better option than bankruptcy. An IVA is better than bankruptcy because:
- An IVA gives the debtor a say in how his or her assets are dealt with .
- An IVA lets the debtor decide how debt re-payments are made.
- The overall costs of an IVA are lower than for bankruptcy.
- An IVA also allows the debtor to avoid some of the restrictions that apply to bankruptcies.
For instance:
- You can still hold public office if you set up an IVA, you can’t if you are declared bankrupt
- Your employment and professional status is unaffected by an IVA. It is affected by bankruptcy
- You can continue to run your own business and act as a director if you set up an IVA. You can’t if you become bankrupt
- There is no social stigma with an IVA. There is a stigma associated with bankruptcy.
IVAs From the Creditors Perspective
An IVA is attractive to creditors because of the high fees associated with bankruptcy proceedings.
There is often not much left for the creditor after the completion of bankruptcy proceedings, unless the debtor has significant assets.
How Can I Set Up an IVA
An IVA needs to be set up by an insolvency practitioner. This is because it is a legally binding agreement.
We work with a panel of preferred insolvency practitioners who can set up an IVA for you.
Please click here to apply for an IVA.
or
If you would like to speak to an independent IVA advisor for further information, then please:
a) Call us on freephone 0800 138 5445
or
b) Send an email to info@iva-advice.com
How Does the IVA Process Work
Once you have applied for an IVA:
1.An insolvency practitioner prepares an IVA proposal. This contains details of your financial situation and how you plan to deal with your creditors.
2.The insolvency practitioner files an Interim Order with the court after the IVA proposal has been finalised.
3.After the Interim Order has been filed, your creditors are not allowed to issue bankruptcy proceedings against you until they’ve decided whether or not to accept your IVA.
4.The insolvency practitioner then circulates a Nominee’s Report which gives a professional opinion about the IVA being proposed and whether a creditors’ meeting should be called.
5.Your creditors meet to discuss whether or not to accept the IVA. A vote of 75% in favour is needed for the IVA to be accepted.
6.If they agree to accept the IVA, they are legally bound to do so.
7.The insolvency practitioner administers the IVA and makes sure that the creditors get paid in line with the agreed terms.
Benefits of an IVA
Costs Associated with an IVA
Our insolvency practitioners will not charge you to set up an IVA.
Most insolvency practitioners take their fees from the IVA fund that is paid to your creditors.
In other words, it is your creditors, not you, who are paying the insolvency practitioner’s fee.
For more information about the costs associated with an IVA please:
a) Call us on freephone 0800 138 5445
or
b) Send an email to info@iva-advice.com