All About Debt Relief

IVA: Individual Voluntary Arrangement


What Is an IVA

The IVA (Individual Voluntary Arrangement) was introduced by The Insolvency Act of 1986 as an alternative to bankruptcy which benefits both the debtor and the creditor. An IVA enables people facing financial difficulties to come to a formal agreement with their creditors rather than having to face bankruptcy.

The IVA represents an exciting new opportunity to those facing serious debt to both avoid bankruptcy and to make a fresh start. In this article, we'll answer the most frequently asked questions about the IVA.

What Are the Advantages of an IVA

  • With an IVA you only pay back an agreed percentage of your debts
  • While an IVA is in place, it is illegal for your creditors to harass you
  • With an IVA, interest on your loan is frozen which means that your debt won't keep growing
  • An IVA doesn't affect your professional status or ability to hold public office like bankruptcy does

What Are the Disadvantages of an IVA

  • If you don't stick to the terms of your IVA then the insolvency practitioner or your creditors can make you bankrupt.
  • If your circumstances alter which means you can no longer afford the payments, your IVA may end if the insolvency practitioner is unable to convince your creditors to accept a new agreement.

How Do I Set Up an IVA

  • With the help of an insolvency practitioner, you outline a debt repayment proposal which clearly demonstrates how it benefits your creditors and which shows what funds and assets are available for them.
  • Then you apply to the court for an interim order. If this order is granted then the creditor cannot petition for bankruptcy.
  • The creditors then meet to decide whether or not to accept your proposals.
  • If the creditors approve your proposals, they are binding on everyone who had notice of the meeting. If this happens, the insolvency practitioner takes charge of the assets which are administered for the creditors in line with the proposals.

    Recommended IVA Body:

    Clear Start is an independent free IVA helpline offering IVA help and advice to anyone in the UK.

    To contact an IVA adviser click here: IVA ADVICE or telephone freephone 0800 138 5445.

    Who Might Benefit From an IVA

    An IVA can help anyone experiencing debt problems- particularly those who own property which they would risk losing if they were to be made bankrupt.

    An IVA might be a good idea for you if you if:

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