IVA Advice

Individual Voluntary Arrangement (IVA) is a formal alternative for individuals wishing to avoid bankruptcy.

The IVA was established by and is governed by Part VIII of the Insolvency Act 1986 and constitutes a formal repayment proposal presented to a debtor's creditors via an Insolvency Practitioner. Usually (but not necessarily) the IVA comprises only the claims of unsecured creditors, leaving the rights of secured creditors largely unchanged.


An IVA is a contractual arrangement with creditors and can be as flexible as an individual's own circumstances; they can therefore be based on capital, income, third party payments or a combination of these.
(After taking independent advice, debtors with less serious problems may wish to consider a debt management plan).

Process
Creditors take a decision at a creditors' meeting called to consider the IVA proposal. The return to creditors is often higher than they would receive in bankruptcy. A vote is taken - by value. If any of those voting are 'associates' (usually business associates, friends and family) then a second count is taken and 50% of non-associated creditors must approve it.

IVA's were originally designed to provide relief to debts generated as a result of business insolvency. In recent years, increasing levels of consumer debt has led to many insolvent individuals with non-business generated debts seeking the legal protection offered within an IVA. IVAs may be popular with people who have large amounts of assets which they wish to protect. These assets, such as high equity properties and expensive cars etc, are not directly at risk under an IVA – as they may be in a bankruptcy.

In the UK, an increasing number of consumer debtors with overwhelming levels of debt are turning to specialist debt advice organisations that offer an alternative to bankruptcy via the use of an IVA.