What is an IVA?
An Individual Voluntary Arrangement (IVA) is a contractual agreement between a debtor (the person that owes money) and their creditors (the parties that are owed money) regarding new payment terms for outstanding debts.
Why would you enter an Individual Voluntary Arrangement?
Advantages of this personal insolvency process include:
- Avoids Bankruptcy
- Debtor retains control over their assets
- Assets can be excluded from the arrangement; their value is replaced by contributions
- Less likely to affect employee status
- The lower cost could see a higher return to creditors
- A key advantage of this process would be for the debtor (the person that owes money) to potentially stay in their home where they may lose it during bankruptcy
- An IVA is based on the individual’s ability to afford repayments and their personal asset position
An IVA is Based on Ability to Pay
The agreement is based on the ability to pay, of the debtor once reasonable personal expenditures are removed from the equation. This process typically lasts 5 years where annual payments are made to creditors that are agreed in the creditors’ meeting when the process is initially set up. A pence in the £ offer is made within the proposal for the creditors to agree to, and this figure is created by the Insolvency Practitioner going through the debtor’s personal details to work out an appropriate figure.
Why do You Need an Insolvency Practitioner?
The main role for the Insolvency Practitioner is to ensure a fair balance between the interests of the debtor, the creditors and other parties involved.
The Insolvency Practitioner will be known as a Nominee at the beginning of the process where they will review the debtors’ financial details and put together the proposal for the Creditors Meeting.
Their role will then be known as a Supervisor if the proposal is agreed to and the debtor enters the IVA process. Their role will be governed by the terms of the arrangement.
FA Simms & Partners are Licensed Insolvency Practitioners
How We Handle IVA’s
An initial conversation with one of our Insolvency Practitioners will help advise you of the Individual Voluntary Arrangement process and can be followed by a meeting at a location convenient to you. We will then discuss further details of the IVA process and you will decide if you want to proceed, but only once you’ve had time to think it over and had all your questions answered. If you want to proceed we will require a Nominee’s fee while we provide the following role:
- Go through personal details and finances to work out what can be offered to creditors to make an IVA worthwhile for them
- Help put together a proposal to creditors stating the pence in the £ offer and also highlighting why an IVA has been chosen over bankruptcy
- Organise the relevant meetings and paperwork for the process
- If the proposal is accepted, then our role turns into a Supervisor and we perform regular reviews throughout the year and the then an annual report at the end of each year where the distributions will be made to creditors