COVID-19: WHAT TO DO IF YOU ARE IN AN IVA

Many are impacted by the coronavirus outbreak, but for those in an Individual Voluntary Arrangement (“IVA”), this could lead to greater uncertainty and concern.
We have contacted all our debtors in Individual Voluntary Arrangements (IVAs) and agreed terms for the short term in this uncertain time.

The changes however could have significant impacts for those in IVAs, especially where the proposals are written in such a way that they do not allow for flexibility, reduction in income, payment holidays or the discretion of the Supervisor etc.
Any change from the proposals of an IVA require a variation approved by creditors, and this is still the requirement under the Insolvency Act 1986 (as amended, and enacted). It would hard to known how creditors would vote at this time, when many may be impacted themselves by the outbreak.

Anyone in an IVA concerned, should

• First review their proposals and the terms and conditions of those proposals.
• Consider their current position, whether.
  • Employed and still working,
  • a furloughed worker and receiving 80% of wages (or full wages topped up by employer); or
  • self-employed or freelancer with reduced income
• Depending on your employment status, consider the government support available (See our summary in our COVID-19 Hub)
• Consider whether you can obtain repayment holidays for mortgages and secured loans excluded from the IVA
• Given all the above then assess whether you are impacted financially, and whether there is scope within your proposals to balance your monthly commitments and IVA contributions. (Your Supervisor should assist you with this)
• You also have a duty to notify your Supervisor of any changes in circumstances, whilst they will be aware of the coronavirus outbreak, you should notify them of any specific changes to your circumstances.
• Remember missed payments will be a default of the terms and count towards a breach of the IVA. This could impact the successful completion of your IVA, it is therefore wise to speak to your Supervisor and plan cashflow as soon as possible, to know your options.

We have consulted with all our debtors in IVAs to advise of them of the support they can obtain, those still working have at least 80% of their wages, and fortunately our IVAs allow for a degree of flexibility to reduce payments by 15% without further creditor approval. Our proposals also offer repayment holidays, and as such we see no reason for any our of our Individual Voluntary Arrangements to be breached at this stage.