Individual Voluntary Arrangement (IVA)

This page aims to explain the advantages and disadvantages associated with an Individual Voluntary Arrangement.

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.
A voluntary arrangement 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 for 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 voluntary arrangement once all the conditions of the arrangement have been complied with.

Call us on 0800 195 4585 to discuss if an individual voluntary arrangement is appropriate for you