Category Archives: Individual Voluntary Assignment

How to apply for an Individual Voluntary Arrangement (IVA)

IVA is a legally binding arrangement between the debtor and the creditors in which the debtor agrees to pay a certain amount in a monthly basis into the IVA in order to clear off his debts. The amount that is paid to the IVA is calculated after analyzing the income and expenditure of the debtor. However, the debtor has to fulfill certain strict criteria to apply for an Individual Voluntary Arrangement:

In order to qualify for an IVA, the debtor must have a minimum amount of debt and the number of creditors.

The debtor or the partner must have a regular source of income originating from regular employment.

If the debtor is a homeowner, his mortgage payments will be taken into consideration as expenditure costs.

If the debtor’s personal financial situation changes during the IVA, the Insolvency Practitioner will act on the debtor’s behalf and submit a revised offer to the creditors.

The Individual Voluntary Arrangement will come into effect after the creditors have accepted the proposal submitted by the Insolvency Practitioner on behalf of the debtor. This proposal is approved during the creditors meeting when it is submitted to the creditors’ vote. If more than 75% of the creditors in value vote (in person or by proxy) in favor of the proposal, the IVA is considered to be approved. However, if any of those voting are associates (business associates, friends or family), a second count takes place during which 50% of non-associated creditors must vote in favor of the IVA proposal for it to be approved.

During the IVA period, if the personal and financial situation of the debtor changes, a new proposal has to be submitted by the Insolvency Practitioner. The creditors will review the proposal and vote for approval. Once the IVA is accepted by the creditors, all charges and interest rates will be frozen.

If for some reasons, the debtor defaults in his monthly repayments, it is more than likely that the debtor will be considering a bankruptcy if no new terms can be found in order to carry on with the IVA. An IVA and Bankruptcy are not mutually exclusive. A person who has already gone through bankruptcy can still propose for Individual Voluntary Agreement. If the arrangement is agreed post-bankruptcy, then the debtor can apply for annulment of the Bankruptcy Order from the court. It then becomes possible to nominate an Official Receiver to supervise the arrangement. This type of arrangement is called a Fast Track Voluntary Arrangement and is only suitable in certain cases.

There are many other articles also in the internet for IVA advice, if you want to know more about IVA to though them.

Individual Voluntary Assignment

After the Insolvency ACT 1986, the UK government came up with an agreement that is made between the debtor and the creditor to repay their debts in regular installments. This repayment term can extend up to a period of 5 years and is known as Individual Voluntary Arrangement. This arrangement has a lot of strong points with the following advantages.

Through the individual voluntary arrangement, you can repay your debts within a period of five years without a hitch.

Debts can be paid off faster if you can arrange extra cash on certain months and make lump sum payments.


The agreement between the lender and the borrower is kept in confidence.

 

Individual voluntary arrangements are not published in the newspapers or in any other manner.

Bankruptcy is complicated and in most cases, the proceedings are pricey. IVA can be a lot affordable.

Individual voluntary arrangement has a positive impact on your credit ratings. Bankruptcy will hurt your credit scores and will stay on your credit report for 7 years.

Bankruptcy has certain limitations and job restrictions. You may have a hard time if you are in between jobs. Whereas, if you look into IVA, there is no limitation and you can carry on with your job while your debts are getting repaid with your creditors.

It is very important in the IVA procedure that you abide by the rules and terms set with the creditors. You will not be hounded by your creditors and cannot hold out your money, except when you fail to pay.

Creditors have the right to ask for their money if you default on your payments. There will not be any risk to your assets and other properties if you are making regular payments to your creditors.

You cannot be bothered with conditions and demands by the lenders after your debts have been repaid.

Talk to an individual voluntary arrangement expert and he will suggest you the best possible solution. They will consider your business or financial situation while working out the suitable options. You can actually save yourself from IVA bankruptcy.