IVA - Insolvency

IVA or Individual Voluntary Arrangements in England, Wales & N. Ireland

1:    IVA's should only be entered into in extreme circumstances.

2:    An IVA is a legally binding agreement between a debtor and their creditor/s.

3:    IVA's are only available in England, Wales and Northern Ireland. Protected Trust Deeds in Scotland are the Scottish alternative to IVA's.

4:    Individual Voluntary Arrangements usually last for 5 years or 60 months but can go on for longer in certain cases.

6:    When entering an IVA a person would be expected to disclose all of their income and expenditure details in order to establish a disposable income.

7:    The disposable income is the amount agreed upon which the individual will contribute on a monthly basis towards the IVA.

8:    The debtor will agree to pay the creditor an agreed amount each month, after 60 monthly payments the debtor would be free of the debt and any remainder owed or outstanding         would usually be written off by the respective creditor/s.

9:    A meeting of creditors is where the individual voluntary arrangement is proposed and the majority creditor has the right to object, their acceptance is pivotal to the IVA going ahead.

10:   An IVA is not always the best solution for people who are struggling and continue to do so.

11:   Only an insolvency practitioner can manage and supervise an IVA for a consumer. An insolvency practitioner is a qualified individual who practices insolvency.

12:   All IVA fees and costs should be disclosed to the debtor prior the IVA proceeding and no upfront fees should be charged to the debtor.

Pros and Cons of an IVA in England, Wales and Northern Ireland

The Advantages of an IVA or Individual Voluntary Arrangement

  • Prevent Bankruptcy and further court actions with an Individual Voluntary Arrangement
  • An IVA allows you to plan for an exact end date to clearing personal debt.
  • Creditor calls and creditor letters are stopped with an IVA
  • Interest and charges are stopped with an IVA
  • An individual voluntary arrangement is a Government approved scheme.
  • Creditors cannot change their mind or renege once an IVA is agreed or accepted.
  • An Individual Voluntary Arrangement is still possible if you have been refused loans to consolidate debts.

  • The Disadvantages of an IVA or Individual Voluntary Arrangement

  • If a person entering an IVA is a homeowner with equity in their home, they may be expected to remortgage and release equity from the property in order to increase the total     contribution back to the creditor/s. This would normally happen in the last 2 years of the Individual Voluntary Arrangement.
  • An IVA will remain on a credit file for 6 years or more. People are not expected to apply for credit whilst on an IVA and the ability to obtain credit can be affected
  • A an IVA is half way to Bankruptcy and is classed as Insolvency.
  • Any excessive expenditure will be scrutinised during the IVA process.
  • If the person entering the IVA owns any assets of value it would be expected that these are changed for lesser alternatives.
  • Should income increase whilst in an IVA the debtor would be expected to increase the payments / contribution towards the insolvency arrangement.
  • 75% of creditors must agree to the IVA for it to proceed.
  • Failure to maintain payments for an IVA could result in Bankruptcy or further court action.