An Individual Voluntary Arrangement, commonly referred to as an IVA, is a formal insolvency process that is available to individuals and is used as an alternative to Bankruptcy.
If accepted by creditors, a proposal provides a legally binding agreement between an individual and their creditors. It allows the individual that has put forward a proposal to settle their debts at an agreed quantum, one which must be better than the alternative, which is usually Bankruptcy.
In IVA is usually funded by surplus income, but can also be just as easily funded by the sale of assets or by the provision of funds by a third party, such as a family member.
How to enter into an IVA
To enter into an IVA, you must circulate a proposal to your creditors for them to review and consider. The creditors then vote at a convened meeting of creditors to determine whether you have sufficient support to allow your proposal to be accepted. For your proposal to be accepted, 75% of those creditors voting, must vote in favour. If any creditors choose not to vote on your proposal, and 75% of those voting in favour agree to the voluntary arrangement, those creditors who chose not to enter into the vote will be bound by the terms of the voluntary arrangement.
If you are successful in getting your IVA approved by your creditors, your debts are frozen. This does not take into consideration and debts that you incur after the date of your voluntary arrangement.
How do I propose an Individual Voluntary Arrangement?
- To put a proposal for an individual voluntary arrangement to your creditors, you will need the services of a Licensed Insolvency Practitioner. A licensed insolvency practitioner will discuss your financial affairs with you and determine whether an individual voluntary arrangement will present the best option for you. Our partners and licensed insolvency practitioners have over 1000 years combined experience and have helped numerous individuals with consumer debt problems, together with sole traders who don’t have the safety net of a Limited Company.
- With a comprehensive review of an individual’s financial position, we give consideration to all of the options that are available and provide assistance with both the preparation of a proposal to creditors and any subsequent negotiation of the terms. Our extensive IVA experience means that we understand what creditors require and ensures that the terms of a tailor-made solution are reasonable, realistic and achievable.
What are the advantages to an IVA?
- It helps an individual avoid bankruptcy and the stigma that attached to that process.
- It usually allows for you to retain control over your assets, subject to the terms of the proposal accepted by your creditors.
- Certain assets can be excluded from an IVA upon agreement by your creditors.
- The professional costs associated with an IVA are usually lower than anticipated.
- The proposed return to your creditors is higher than the alternatives available, which usually is bankruptcy.
How long does an IVA last?
- An IVA usually last for five years, but can be extended up to seven by agreement of your creditors.
- They can last for less than a year is the proposal allows for certain assets to be realised to allow a repayment of debt.
When considering entering into an IVA, then you need to be first of all aware that any proposal is based upon your ability to repay a monthly contribution into your arrangement. If you do not have any surplus income, or assets that are realisable, then an individual voluntary arrangement will perhaps not be the best procedure for you. It should also be noted that if you enter into an individual voluntary arrangement and you fall behind with the agreed contributions, then it is likely that Bankruptcy will ensue.
How can Corporate Financial Solutions help?
We are first and foremost licensed insolvency practitioners. You will need a licensed insolvency practitioner to put a proposal to your creditors. All initial advice and guidance that we provide is done so free of charge. If, upon discussing your financial affairs, that we determine that an individual voluntary arrangement is the correct procedure for you, we do have what is acknowledged to be some of the lowest professional rates in the industry.
UK Wide Support from our Offices in London & Nottingham
All advice is provided by one of our partners who will see your affairs through from commencement to finalisation. We have offices in London and Nottingham in the Midlands, making us well placed to support our clients throughout the UK.