Individual Voluntary Arrangements
Often referred to as an IVA, this is a process permitted under the Insolvency Act 1986 where a proposal is made to your creditors to repay some or all of your debts over a period. The process is supervised by an Insolvency Practitioner appointed by your creditors to receive the payments from you and pass them on to your creditors.
The proposal to your creditors must be accepted by at least 75% by value of the creditors. If it is, then all your creditors are bound by the Arrangement and, provided that you meet the agreed payments on time, your debts will be cleared at the end of the payment term.
An IVA is not bankruptcy, and if you stick to the Arrangement, you are permitted to borrow money, be a company director, retain your assets and use any spare cash you may acquire as you wish. If you fail to make the payments on time, however, the Insolvency Practitioner acting as Supervisor for your creditors may commence bankruptcy proceedings against you.
It is therefore important that you do not agree to pay more than you can afford, even if this means that the IVA is not accepted by your creditors. If you are later forced into bankruptcy, this can be worse for you than declaring yourself bankrupt in the first place.
An IVA is a useful tool if you have a regular income which more than covers your living needs but which is not enough to clear your debts immediately or on time. It will take time to prepare the documents for an IVA and it is often wise to obtain from the Court an Interim Order preventing your creditors taking action against you pending receipt of your proposals.
The proportion of your debt which your creditors are likely to accept in settlement depends on your circumstances and their internal policies. If you offer too little, the Arrangement will not be accepted and if you offer more than you can afford to pay, you may eventually fail to make the payments and could be forced into bankruptcy.
Abacrombie & Co offer the following services for an IVA:
- Help in preparing cash flows
- Advice as to the level of offer your creditors
- Applications for Interim Orders where advisable
- Contact with your creditors to inform them of the IVA
- Preparation of a Statement of Affairs
You cannot propose an IVA without appointing an Insolvency Practitioner to supervise the Arrangement. We have relationships with a panel of carefully selected Insolvency Practitioners, and will recommend a suitable appointee for your own circumstances.
For more information call us on 0800 694 1400 to arrange a FREE, NO OBLIGATION consultation with one of our experienced specialist consultants.
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