IVA Advice
What is it?
Widely used by individuals seeking to avoid the stigma of bankruptcy, an Individual Voluntary Arrangement ("IVA") is a formal agreement between a person owing money ("debtor") and his or her creditors, under which the debtor undertakes to makes certain payments or realise certain assets, or both, in full and final settlement of their debts.
Who is it for?
- Good for people with debts than more than £15,000
- For
long standing debts that are going nowhere
Please see our IVA calculator to see if an IVA is the best option for you
For any advice on financial difficulties, e-mail us here 
Or alternatively talk to us on Live Support here 
The Process
Whilst there is no requirement to repay creditors in full over the period of the IVA, creditors will expect to receive at least as much as they would have, had the debtor been made bankrupt.
In addition, because the contract ("the proposal") setting out what the debtor intends to do during the IVA proposal requires the approval of more than 75% by value of their creditors, the greater the return to creditors the greater the likelihood of them accepting the proposal.
In considering an IVA it should be noted that the amount of your debts will be frozen at the date the proposal is agreed and interest will, generally, not continue to accrue.
An IVA requires the involvement of a licensed insolvency practitioner ("IP"), who will help you to put together your proposal and arrange the meeting of creditors to consider it. Chamberlain & Co has IP's with the qualifications necessary to be able to assist you to do arrange an IVA. Once the IVA is approved the IP will be appointed supervisor.
Whilst the exact terms of the proposal can vary, in a typical IVA you will be required to make an affordable monthly payment to the IP out of any surplus income, after living expenses, over a period of up to five years. In addition, if you own a property with equity in it, you may be required to make a lump sum payment(s) at the end of the IVA.
After deducting fees, the IP will make periodic payments to the various creditors, the size of which will be dependent on the contributions made by the debtor and the relative size of that creditor's debt.
Provided you carry out what you promised to do in the proposal you will, in a typical IVA, be free of your debts in just over five years.
Advantages
- You will not automatically lose control of your assets as your interest in them will not transfer to the supervisor. The terms of your proposal may, however, require you to transfer certain assets to the supervisor or pay over an amount equal to their value
- An IVA may give you greater control over postponing, avoiding or crystallising the realisation of any equity in the family home
- An IVA will not necessarily act as a bar to remaining in practice, as a chartered accountant or solicitor
- It is easier for you to remain in business as you will not be automatically disqualified from acting as a director of a limited company; partnerships will not automatically be dissolved and statutory restrictions on obtaining credit do not apply
- Less stigma than bankruptcy
- An IVA is not advertised in a local paper or in the London Gazette, although your details will still be entered on the Individual Insolvency Register
- An IVA can allow you to organise your tax affairs, i.e. plan disposals to maximum advantage of tax allowances
- An approved IVA not only binds every person entitled to vote at the creditors' meeting, but also every person who would have been so entitled to vote, if they had had notice of it; so unknown creditors will also be bound. This may include creditors such as landlords who, although generally entitled to distrain in bankruptcy, will not be able to exercise this remedy after the approval of an IVA by the creditors' meeting in respect of any pre-approval liabilities
- If you subsequently find yourself unable to comply with the terms of your IVA, perhaps due to a change in financial circumstances, it may be possible to amend the arrangement terms, provided the agreement of the appropriate majority of your creditors can be obtained
Disadvantages
- The IVA may impose more onerous obligations over a longer period than bankruptcy
- Creditors may suggest modifications which could include the sale of the family home or the realisation of some or all of the equity within it
- If you fail to comply with your obligations under the terms of the proposal a bankruptcy petition may be issued by the supervisor
- You may encounter difficulties in obtaining credit, as a note of the IVA will remain on your credit file for six years from the date of the approval of the arrangement
- There is no automatic discharge; you are released from a IVA once all the conditions of the arrangement have been complied with
| To view the R3 Standard Terms & Conditions for an IVA - November 2004 please click the following link |
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Other Options available
Bankruptcy , Informal Arrangement , Debt Management Plan , Consolidation Loan , Remortgage
Call us on 0800 195 4585 to discuss if an 'Individual Voluntary
arrangement' is appropriate for you.
