Voluntary
Arrangement
An Individual Voluntary
Arrangement (IVA) is a formal agreement between
you and your (lenders) creditors.
 It is generally appropriate for people who are
unable to make their monthly repayments in full but who do
have some money to give to their creditors each month.
An IVA proposal sets out how you are going to repay your
creditors, usually over a period of five to six years.
The Individual Voluntary Agreement can
also take the form of a lump sum raised from the sale of an
asset such as property or an insurance policy or a contribution
from friends or family.
The process
Individual Voluntary Agreements can
only be put together by an Insolvency Practitioner (IP) - most
advice companies will be able to put you in contact with one
but always ask about their fees and whether you need to pay
anything up front.
The firm you choose to conduct your Individual Voluntary
Agreements will need to ask you a number of questions about
your financial situation in order to calculate how much you can
realistically pay your creditors each month. They will then
multiply this amount by 60 or 72 months. If it seems that over
this period you could pay back a reasonable amount of your
total debt, it may be taken that an Individual
Voluntary Agreement is a suitable option for
you.
Once proposals for repayment have been drawn
up, an Interim Order may be applied for. Whilst the Interim
Order is in place, your creditors cannot take action against
you without asking the Court. A meeting date will be
arranged and full proposals sent to all creditors who will
then have the opportunity to vote on them.
If enough of your creditors (75% in value) agree, the
Individual Voluntary Agreement will become legally binding. You
then make agreed payments for a number of years (usually five
or six) and providing you have completed your Arrangement as
agreed and once the final payment is made, your liabilities to
your creditors are discharged in full.
IPs will conduct regular reviews of your arrangement and try
to help you to complete it successfully.
Many Insolvency Practitioners will charge you an upfront fee
for putting together the Arrangement. However, others will
not.
The Advantages of
an Individual Voluntary Arrangement
- You may only pay back a percentage of your debts and be
free from making further payments after completion of the
arrangement.
- You only have to make one monthly payment.
- The Arrangement is legally binding so that your
creditors cannot change their minds once they have
agreed.
- Once the IVA is in place your creditors cannot bring
any other action against you as long as you maintain your
reduced monthly payment.
The
Disadvantages of an Individual Voluntary Arrangements
- IVAs are only suitable if you have the means of making
your creditors a reasonable offer of repayment.
- Your creditors have the opportunity to agree or
disagree with the arrangement through a vote. However, most
Insolvency Practitioners will not suggest this course of
action to you unless they think there is a good chance your
creditors will accept.
- If you do not make the payments to the IVA it is likely
that the Arrangement will fail and your creditors will be
able to take other action against you.
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