Personal Financial Problems
Individual Voluntary Arrangements (IVAs) can ONLY be undertaken by a licensed Insolvency Practitioner. Anyone else claiming to offer a similar solution is only offering an informal arrangement which is not legally binding on all of your creditors.
IVAs provide an alternative route to bankruptcy. As an IVA is a formal insolvency procedure it requires 75% in value of voting creditors to support your proposal for it to be accepted. Creditors can also seek to modify the proposal before agreeing to it. If your proposal is accepted, all of your creditors are legally bound by the terms of your proposal.
What is an IVA?
- It is an agreement between you and those to whom you owe money (your creditors) to pay them part or all of your debts.
- Once accepted by 75% in value of voting creditors, it is legally binding on all of them.
- It may last for any period but usually up to five years if it is based on contributions from your income.
- It is monitored by an Insolvency Practitioner, known as your Supervisor
- At the end of the IVA, providing that you have complied with its terms, your creditors are obliged to write off the balance of the debts.
What do I offer?
- Commonly you will offer to make a monthly contribution from your surplus income to your Supervisor, by standing order, rather than many unstructured payments to your individual creditors.
- The amount of the monthly contributions will depend on your income and expenditure. They will be set at a level that you can afford.
- Alternatively, you may decide that a friend or relative can lend you money to make a one off offer to your creditors. This will shorten the period of the IVA.
- You must ensure that you disclose all details of your assets and liabilities to your creditors. All assets and liabilities will be dealt with within the IVA, including any property.
Will this affect my ability to obtain credit?
- If you are in financial difficulties, it is likely that obtaining credit is already difficult
- An IVA will show up on a credit search, there is a central register.
- However, an IVA is not advertised. It is only disclosed to your creditors so will not appear in a national or local paper.
- It does not, in theory, affect your ability to obtain credit. In practice, obtaining credit will be difficult.
- It need not be disclosed to your employer.
- It does not affect your rights to be employed or self-employed
- You will continue to operate a bank account and control your own affairs.
How do I apply for an IVA?
- We will prepare the proposals on your behalf, contact your creditors and generally take all steps necessary to put the IVA in place.
- You will be required to provide us with full and complete details of your affairs, including valuations of any property, to enable us to agree your proposals and consider any modifications that are put forward.
This note is meant as a brief overview of the main concerns experienced by people who are considering entering an IVA. It is not a detailed review and further detailed advice should be taken before coming to any decision. No responsibility can be accepted by Campbell Crossley & Davis, its partners and employees for any loss occasioned by any person or persons acting or refraining from action as a result of material contained in this note.