Home » IVA Individual Voluntary Arrangements

The IVA Procedure

An Insolvency practitioner is assigned to your case and between you; you decide how much you can realistically afford to pay back each and every month over 5 years. If 75% of your creditors agree this is reasonable, all debt and the future interest are frozen when the proposal is agreed. By '75% of your creditors', we mean the creditors to which 75% of the debt is owed.

The creditors normally accept debt outstanding at the end of the agreed period can be are written off provided you have kept up with the negotiated monthly payments. If you are confident you can keep up the monthly payments, then an IVA could be the solution for you.

An IVA is the best method to resolve worsening debt problems, especially if you are a homeowner with equity to protect.

How do I apply for an IVA?

An Individual Voluntary Arrangement (IVA) is a formal arrangement through the county court. To obtain an IVA we would need to appoint an Insolvency Practitioner on your behalf.  The Insolvency Practitioner (IP) will act as nominee and your representative to your creditors until the IVA is formally approved. The IP will supervisor during the remaining term of the IVA. 

What are the risks to my assets?

Your property, savings and investments are at reduced risk than with bankruptcy but there is still some risk. As the debtor normally proposes the IVA, and because creditors are being offered regular payments, they tend to be more flexible. It is more usual for creditors to require savings and realisable assets (endowment policies, premium bonds, ISAs etc) to be cashed with the home remaining relatively untouched except for the release of some of the available equity usually towards the end of the arrangement.

Will an IVA impact my credit rating?

IVAs will effect your credit rating. If you've taken out loans and demonstrated you are not able to maintain repayments, this is obviously the case. While the IVA is in place, you will not be allowed to take out further credit without the permission of the supervisor of the IVA.

Will details of my IVA be made public?

IVAs do not have the stigma that is attached to bankruptcy, so the impact on reputation is minimal. IVA's are not advertised in the press. However, they will be recorded on the IVA register held by the DTI.

Advantages of an IVA

• There is not the stigma or publicity that normally accompanies bankruptcy.
• A debtor can continue to trade in a business to generate income.
• The debtor is involved in the choice of assets made available to creditors since the arrangement is designed to suit the debtor's situation. All this is providing the creditors are no worse off than if bankruptcy had taken place.
• Administration costs are normally lower than bankruptcy, enabling higher payments for creditors.
• Creditors can claim tax relief against bad debts just as with bankruptcy.
• Creditors who vote against the IVA are still bound by it as long as the required majority (75%) in value of the creditors who have voted agree to it.
• The debtor does not suffer the same restrictions imposed on bankrupts. For example, a debtor can still be a company director or be in the armed forces.

Step-by Step Procedure of an IVA proposal

• A questionnaire providing the Insolvency Practitioner is completed with information required to prepare the IVA proposal.  Once this has been considered, the insolvency practitioner will arrange a meeting to advise you of your options.
• You sign a formal letter authorising the IP to contact your creditors. This is to stop your creditors from contacting you, allowing them to contact the IP instead, which helps reduce stress on yourself.
• A draft proposal is prepared based on information provided, and is sent to you for approval. You may be asked to provide further details of any information that may appear to be missing or need further clarification.
• The draft proposal is returned to the IP by you with any alterations. The IVA proposal will then be updated and sent back to you for final approval.
• You sign the proposal and return it to the IP upon which he will then formally agree to become your nominee.
• The IP is then required to make out a report and to comment on your offer to creditors and will then lodge his/her report and your IVA proposal in court.  This is a formality, and you will not be required to attend court unless there are exceptional circumstances. 
• A creditor's meeting is arranged. The IVA proposal and the Nominee's report are sent to all creditors to consider.  You do not need to attend the meeting.
• At the meeting, the creditors vote on whether they are willing or unwilling to accept your offer and if 75% by value of those creditors voting agree to accept your offer, then the IVA will become approved.  The Arrangement will be binding on all creditors at that stage, whether they voted or not.

If necessary the creditors meeting can be adjourned for up to 14 days to consider any revised offers, if applicable.