Insolvency

Individual Voluntary Arrangement (IVA)

An IVA will release someone from all their unsecured debts and is an alternative to a “Debt Management Scheme” or “Bankruptcy”.

If an individual is unable to pay their debts in full, then they can propose an IVA to their unsecured creditors.

An IVA is an agreement to pay a sum of money into a single arrangement for the benefit of unsecured creditors, i.e. those who do not hold security over any assets. This could result in up to 75% of these debts being written off by the creditors.

Once an IVA has been approved no unsecured creditor can take any further action to recover their money, outside of what has been agreed in the IVA.

A typical IVA could include an offer to pay a:

Lump sum of money, possibly obtained from a remortgage;
Monthly payment from disposable income, for between 3 and 5 years; or
Combination of the above.

If 75% in value of unsecured creditors, who vote, agree to the IVA then all creditors, even those voting against the proposal are bound by it.

An Insolvency Practitioner (IP), who is regulated and holds a license from their governing body, must agree that the IVA is fair to both the individual proposing the IVA and their creditors. The IP will become the supervisor of the IVA on its approval and will be responsible for ensuring that it is implemented as agreed.

Typical people entering into an IVA include:

Business people wishing to continue in their trade, where Bankruptcy would otherwise have prevented them;
Professionals whose employment would be jeopardized by Bankruptcy;
Individuals with assets to protect, such as their home;
Someone with debts over £18,000 and is able to make a lump sum payment, or monthly contributions for 3 to 5 years and wishes to avoid Bankruptcy.

For a detailed analysis of your financial affairs and to discuss you options in detail, please call Mark Bassford or Tess Whitney on 020 7213 0470.