Individual voluntary arrangements
Overview of individual voluntary arrangements, including advantages and disadvantages
An Individual Voluntary Arrangement (IVA) may be an option for you if you have surplus income each month. If your creditors agree to an IVA some of your debt may be written off. IVAs are legally binding, break one and you could be made bankrupt.
How do I get an IVA?
An IVA begins with a formal proposal to your creditors on how you will pay your debts. You will need an insolvency practitioner (IP) to draft the proposal. The IP will charge fees. You must disclose details of all your debts and assets to the IP. The IP will then draft the proposal based on your ability to pay.
The IP will arrange a meeting with all registered creditors to consider the proposal. If creditors holding more than 75 per cent of your debt vote in favour, your proposal is accepted. All your creditors will then be bound by the IVA.
Advantages of an IVA
- All your creditors are bound by it.
- No maximum or minimum level of debt.
- You usually only make one monthly payment to the IP.
- You may keep your home if your creditors agree to it.
- You avoid bankruptcy restrictions.
Disadvantages of an IVA
- Your IVA is entered on a public register.
- The IVA cannot be changed without creditors' agreement.
- If the IVA fails you could be made bankrupt.
- The IP may require advance payment of their fees.
How long does an IVA last?
How long an IVA lasts depends on your proposal. Most IVAs involve monthly payments to creditors lasting up to 5 years.
Fast Track Voluntary Arrangements
It's better to set up an IVA before you become bankrupt. However, if you have become bankrupt you can ask the Official Receiver to help you prepare a Fast Track Voluntary Arrangement (FTVA) to deal with your debts.