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Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement (IVA) can only be used to assist an individual; there are other procedures for Limited Companies. An IVA can be used to help those involved in business as well as those who are employed but have excess borrowings. An IVA is a "deal" between a person and their creditors and is legally binding. The deal may repay debts in full or part over up to five years. Once approved no further interest or charges will be added and creditors cannot demand changes.

Once the arrangement is complete the remainder of the debt is written off. In many arrangements a monthly contribution is made but, once the IVA is approved by creditors, no enforcement action can be taken by creditors bound by the IVA. In the case of a person who has a good business with problems, an IVA may allow time to pay.

Benefits of an IVA include:

certainty in terms of what needs to be done to solve debt problems;
protection from creditors and affordability of monthly payments;
the prospect of becoming debt free despite not paying debts in full;
the possibility of continuing a business;
flexibility reflecting each set of unique circumstances.

Frequently Asked Questions

What if I can't pay creditors back in full?	An IVA may not necessarily require payment in full of debts but creditors will require transparency and justification for receiving less.
Will HM Revenue & Customs support an IVA?	HM Revenue & Customs will consider each proposal on its merits. Our experience and understanding of what HM Revenue & Customs require allows us to expect the proposal to be acceptable to them.
Can I have a bank account?	You will be able to operate a bank account but may not be able to have an overdraft. If you owe money to a particular bank it is unlikely they will wish to offer you an account whilst you are in an IVA.
How is the IVA put in place?	Documents are sent to creditors setting out the deal and inviting them to meetings to consider the proposal. Creditors may chose not to attend but vote by post to accept, reject or accept subject to modifications the proposal. To approve an IVA 75% in value of unsecured creditors who vote.
How long will it take to put it in place?	It depends on the complexity of each case. However, in most cases it will take about four weeks to prepare the documents, convene the meetings and obtain approval.
How long will it last?	It depends on the deal. If creditors are expecting less than payment in full they will expect to see contributions for five years.
What happens if I can't meet my obligations?	Some flexibility on timing of payments is usually built into the arrangement. A variation can also be proposed to creditors alter the terms but, in the event that the problems are terminal, the IVA will fail.
What will it cost?	Each case is priced on its own merits and reflects its complexity and the amount of time required. We will be happy to give an indication of cost once we understand the position.
What if I have not got any cash?	We have come across this problem before! We may still be able to help by structuring the costs differently but, in any event, our first consultation is free so please contact us to discuss how we might help.

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