Individual Voluntary Arrangements (IVA)
An IVA is a legally binding agreement, generally lasting for five years, for the satisfaction of debts, either in full or in part which is binding on all unsecured creditors. It is a method of avoiding bankruptcy, but is an alternative formal insolvency procedure.
Proposals are usually based on the sale of an asset, income contributions or a combination of the two. A proposal for an IVA will need the services of a Licensed Insolvency Practitioner (IP) to enable it to proceed towards approval by creditors.
Advantages and disadvantages of an IVA
The advantages of an IVA:
- All interest and charges on your unsecured debts will be frozen.
- 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 or telephoning you.
- Once the IVA is successfully completed your debts are effectively written off, providing you with a fresh start.
- For anyone who does not wish to consider bankruptcy or cannot go bankrupt because of their job this can be an excellent option.
- All unsecured creditors will be bound by the IVA.
- Your contributions are based on your ability to pay.
- IVAs are not published in local newspapers, unlike bankruptcy.
- 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 IVA:
- You will be required to stick to a budget for the term of the arrangement (usually five years).
- All assets and liabilities must be declared, if you own assets of excessive value, the creditors can ask that they be released for the benefit of the creditors.
- You may be required to make additional payments (normally for an extra twelve months) if you wish to exclude your property from the arrangement.
- In some cases it may be necessary to release some of the equity from your property in the fourth year of the arrangement.
- Any windfalls, inheritance or bonuses must be declared to the Supervisor of the arrangement.
- All IVAs are recorded on a public register and are likely to appear on your credit file.
'REVIVAL' will always give the best advice.
Anyone thinking about putting forward an IVA should ensure that they receive the best advice, explore all the options available to them and only put forward a proposal that is realistic and likely to be accepted by their creditors. You have to be certain that you can afford any payments.
Your proposal will be voted on by your creditors at a creditors' meeting. If over 75% by value of your creditors who are represented at the meeting are in favour, the IVA will be implemented. Creditors may put forward modifications to the proposal, but they cannot impose them on you - you can decide whether to not to accept them.
You are not legally required to attend the creditors meeting, but in practise you should be there otherwise it will be impossible to agree any changes to the proposal. If last minute changes are proposed, you should feel free to ask for reasonable time to think about them. If necessary, seek advice about what is being proposed. It is possible for the meeting to be adjourned for up to 14 days if required.
An IVA gives you an opportunity to avoid bankruptcy. If it is not approved, a creditor may bankrupt you. It follows that you should put forward the best offer you can to your creditors. REVIVAL will help you with this.
Costs of an IVA
There are no upfront fees, as both fees are met from the funds you have paid into the IVA. Both fees are subject to VAT.
Nominee's fee (set up) - £2,000.
Supervisor's fee (five year administration) - 17% of monies paid into the IVA.
REVIVAL...
...understands that this may be a distressing time for you and has helped many people in your situation before. Our judgment and experience can help you to make sure you do the right thing from now on.