IVA’s

What is an IVA?

An  IVA or to give it its' full title - Individual Voluntary Agreement - is a formal agreement between an individual and their creditors. If a person cannot make their repayments in full but are able to pay something each month then an IVA proposal can possibly be established. The proposal sets out exactly what the person will pay their creditors each month. This is normally over a period of five years.

How does it work?

To draw up a proposal for an IVA you will need to appoint a licensed insolvency practitioner (IP). Best Solution can do all the work for you... We will review your financial circumstances and advise you throughout the whole process.

We will require all the details of your unsecured debts to enable the drafting of your formal proposal for presentation to the creditors.

A meeting of the creditors is called and held to decide whether the proposals are acceptable to them or not. Your Insolvency Practitioner will provide each of the creditors with the following:

• Best Solution's comments on the debtor's proposals
• The Proposal
• Notice of date and location of the meeting of creditors to vote on the proposal
• A Statement of Affairs - a list of the assets and liabilities of the Debtor (you)
• A schedule - advising creditors of the majority required to approve the IVA
• A complete list of creditors
• A guide to the fees charged by the Nominee/Supervisor*
• A form of proxy for voting purposes

The supervisor would be appointed once agreement has been met with the creditors, this is usually the IP. *

The meeting of the creditors is held no earlier than 14 clear days after the above has been circulated to creditors. The purpose of the meeting of creditors is to agree or reject the Debtor's proposals, in some cases there maybe modifications requested by the creditors at the meeting such as the period of the IVA or the amount paid. For the proposal to be accepted 75% (in value) of the creditors who vote must be in agreement, they can either vote in person or by proxy at the creditors meeting. All creditors, whether or not they vote, will be bound by the terms of the arrangement.

Upon approval of the IVA, a Supervisor is appointed (usually the IP) to ensure the proposals are adhered to and to distribute the dividends to creditors. From this point forward you will be protected in law from your creditors and they may not contact you regarding the debts.

Assuming the debtor complies with the terms of the arrangement, upon completion of the IVA they will be fully discharged from all liabilities included within it.

The advantages of an Individual Voluntary Arrangement:

1. All interest and charges on your unsecured debts will be frozen.
2. Providing you keep to the terms of your arrangement, you will be protected from any further court action by your creditors. They will also be prohibited from sending letters and/or telephoning you.
3. Once the Individual Voluntary Arrangement is successfully completed your debts are effectively written off, providing you with a fresh start.
4. For anyone who does not wish to consider bankruptcy or cannot go bankrupt because of their job this can be an excellent option.
5. All unsecured creditors will be bound by the IVA.
6. Your contributions are based on your ability to pay.
7. Individual Voluntary Arrangements are not published in local newspapers, unlike bankruptcy.
8. It will not affect professions such as the Police Force and Armed Forces, neither will it affect your ability to hold public office or act as a company director.                           

The disadvantages of an Individual Voluntary Arrangement:

1. You will be required to stick to a budget for the term of the arrangement (usually five years).
2. All assets and liabilities must be declared, if you own assets of excessive value, the creditors can ask that they be released for their benefit.
3. You may be required to make additional payments (normally for an extra 12 months) if you wish to exclude your property from the arrangement.
4. In some cases it may be necessary to release some of the equity from your property in the 5th year of the arrangement.
5. Any windfalls, inheritance or bonuses during the term of the Individual Voluntary Arrangement must be declared to the Supervisor of the arrangement.
6. All Individual Voluntary Arrangements are recorded on a public register and are likely to appear on your credit file.

For more information about IVA's please contact us.

• Debts of £10,000 or more.
• Free confidential advice 24 hours a day
• Three or more creditor companies

If you do not fit all the criteria listed above you may still be eligible for an IVA subject to additional terms and conditions