IVA Advice – why an individual voluntary arrangement is the way forward

IVA debt advice is becoming more and more commonplace as individuals and businesses struggle to keep their head above water since the 2008 economic downturn. So what is an IVA? IVA stands for Individual Voluntary Arrangement, which is essentially an agreed formal alternative to bankruptcy.

To see whether your circumstances are suited to an IVA please try our debt calculator.

The IVA was established through the Insolvency Act 1986 and represents a financial repayment proposal to a debtor’s creditors and is usually advised upon and submitted via an Insolvency Practitioner that specialises in insolvency, like X-debt. To speak to a Professional IVA Advisor please contact X-debt now.

An IVA acts as a contract between a debtor and creditor, the main benefit to the debtor is that the IVA is flexible to the individual’s circumstances and repayments are based on what the individual can realistically afford to repay. Part of the IVA advice process is working out what money is left and available once priority creditors like mortgage, hire purchase repayments and essential living costs have been factored in. This ensures the IVA is manageable for the individual – to set unrealistic goals would simply make the individual’s financial situation worse.

During the IVA proposal stage, a plan is submitted to creditors, who make a decision at a creditors’ meeting, where a vote is taken – 75% must agree to the IVA proposal for it to be approved. Most but not all IVA proposals are approved by creditors but X-debt are very experienced at judging what the individual creditors expect to achieve from an IVA and would advise you if they did not consider whether the proposal had a reasonable prospect of being approved. In some cases the creditors may modify the original terms of the IVA before they will approve it but the debtor will always have the opportunity to agree or to reject the modification.   

Originally IVAs were created to provide relief to businesses, however increasing consumer debt as a result of the economic downturn has extended the IVA to individuals as well as businesses. IVAs are particularly popular among individuals who have assets they wish to protect for instance the family home. There will be provisions in the IVA proposal dealing with equity in the family home, but if the Arrangement is approved the debtor remains in control of his share of the equity unlike bankruptcy where the equitable interest of the debtor vests in the Trustee in Bankruptcy.  An IVA is often the only alternative to bankruptcy and that’s the main reason IVA advice has become so popular.

IVAs and bankruptcy are however, not mutually exclusive. A person can be an undischarged bankrupt but then go on to arrange an IVA. If an IVA proposal is approved during a bankruptcy term, the individual can apply for an annulment of the bankruptcy order.

If you feel you may have debt that has got slightly out of control and were considering bankruptcy, first get some IVA advice from X-debt, we offer free debt advice to get you and your life back on the right tracks.