OUR INSOLVENCY AND DEBT SERVICES FOR INDIVIDUALS
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INDIVIDUAL VOLUNTARY ARRANGEMENTS
AN ALTERNATIVE TO BANKRUPTCY THAT CAN PROVIDE PROTECTION FROM LEGAL ACTION
An IVA is a binding agreement with creditors to repay 25 - 100% of the outstanding debt, either as a lump sum or over several years, with the balance being written off if the IVA is completed successfully. |
WHAT IS AN INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA)?
An Individual Voluntary Arrangement (IVA) is an agreement with your creditors to pay all or part of your debts (writing off the reminder, usually 0 - 75%). You agree to make regular payments, usually as one single monthly payment to the insolvency practitioner or offer a lump sum payment. The insolvency practitioner will then divide the funds between your creditors. The agreement, known as the "Proposal" is binding on you and the creditors and cannot be changed without a formal decision procedure and vote.
An IVA gives you more control of your assets than bankruptcy and has other advantages for directors and professionals.
An IVA has to be carried out by a licensed insolvency practitioner, whom will work out what you can afford to repay and how long the IVA will last. You will need to provide details about your financial situation, for example your assets, debts, income and creditors.
Your insolvency practitioner will contact your creditors. The IVA will start if the creditors holding 75% of your debts in value (that vote) agree to it. It will however, be binding on all creditors even those that disagree to it, providing the 75% agree, and it will stop your creditors taking action against you for your debts.
An IVA gives you more control of your assets than bankruptcy and has other advantages for directors and professionals.
An IVA has to be carried out by a licensed insolvency practitioner, whom will work out what you can afford to repay and how long the IVA will last. You will need to provide details about your financial situation, for example your assets, debts, income and creditors.
Your insolvency practitioner will contact your creditors. The IVA will start if the creditors holding 75% of your debts in value (that vote) agree to it. It will however, be binding on all creditors even those that disagree to it, providing the 75% agree, and it will stop your creditors taking action against you for your debts.
ADVANTAGES AND DISADVANTAGES OF AN IVA
The main advantages of an IVA are;
- Professional qualifications are protected (this may not be avoided in Bankruptcy)
- You have more control over your assets. For home-owners, this is can be the main advantage
- Sole traders or Partners in partnership can continue to trade, and remain in control of their businesses
- If there is a threat of legal action, a moratorium may be obtained for court protection from your creditors
- It offers a better return to creditors than bankruptcy
- All creditors entitled to vote are bound by the arrangement (whether they vote or not)
- Arguably most debtors feel there is less stigma than Bankruptcy
The main disadvantages of an IVA are;
- You need to be employment with a surplus income to make a monthly payment (albeit this is in place of paying all your creditors individually), or need a lump sum
- If you have tax arrears together with a poor history of payment and submitting self assessment returns, It may be hard to seek approval from HM Revenue & Customs, but we can advise on your individual circumstances and liaise with HM Revenue & Customs on your behalf.
- An IVA typically lasts 5 years.
Considering an Individual Voluntary Arrangement?
Call on 07972928153 or Email: lucinda@lminsolvency.co.uk for a FREE Consultation
Call on 07972928153 or Email: lucinda@lminsolvency.co.uk for a FREE Consultation
THE PROCEDURE IN MORE DETAIL
There are three stages to an Individual Voluntary Arrangement (IVA) and the insolvency Practitioner will adopt three roles throughout the process;
- Advisory Stage - assessment of the viability of an IVA, options available and the suitability of one.
- Nominee Stage - is where the Insolvency practitioner acts as your Nominee and assists with the writing of the Proposals to creditors that are basically the terms and conditions of your IVA, which will be binding on both you and your creditors
- Supervisor Stage - Once the IVA is approved the Nominee becomes the Supervisor of the IVA. The supervisor(s) the IVA, collects your payments, pays your creditors, ensures the IVA is followed and reviews your finances annually.
Stage 1 - Advisory Stage
This is an initial review to assess whether an IVA is feasible and to review alternative options. At this stage you may be uncertain of whether an IVA is right for you, and as such we will assess your options with you. This stage may also involve liaising with your creditors to assess the current position or to gauge their level of support.
Having confirmed with you that an IVA is the preferred option, we will conduct a further evaluation, which will assess your assets and liabilities together with your income and expenditure. If a sole trader, a business cashflow forecast will also be prepared or assessed.
During the Advisory Stage, Lucinda Matkin will be advising you (in your own interests) with a view to achieving a workable solution to your financial difficulties. You are obliged to give your full cooperation in this process and provide full disclosure of all relevant matters, to ensure that account is taken of the impact of each possible solution on you and your assets, in particular the family home, and on any third parties that may be affected.
Having confirmed with you that an IVA is the preferred option, we will conduct a further evaluation, which will assess your assets and liabilities together with your income and expenditure. If a sole trader, a business cashflow forecast will also be prepared or assessed.
During the Advisory Stage, Lucinda Matkin will be advising you (in your own interests) with a view to achieving a workable solution to your financial difficulties. You are obliged to give your full cooperation in this process and provide full disclosure of all relevant matters, to ensure that account is taken of the impact of each possible solution on you and your assets, in particular the family home, and on any third parties that may be affected.
Stage 2 - Nominee Stage
Where it is agreed that a proposal should be prepared and a Nominee instructed, the role of the insolvency practitioner changes. During this stage, the responsible insolvency practitioner has a duty to act independently to ensure that the interests of both you and your creditors are fairly represented and accommodated in your proposal, and that the proposal has a reasonable prospect of being approved and implemented.
Once your Proposal has been drafted (in practice by the Nominee) and it is ready to be issued to your creditors you must in effect deliver it to the Nominee with a notice requesting that they act as your Nominee. (In practice, I will provide you with a copy of the relevant notice, draft the proposals and agree the terms with you).
Providing I consent to act as your Nominee (assuming a proposal is drafted that you are happy with, and it fits with the Nominees duties), the Nominee then has 28 days from the date on which they agree to act, to convene a decision procedure and issue your Proposal to creditors. Your creditors must be provided with at least 14 days’ notice of the decision procedure and two days must be allowed for postage (but not more than 28 days’ notice). Your creditors will therefore be expected to make their decision approximately three weeks from the date on which we are appointed as Nominee.
Once your Proposal has been drafted (in practice by the Nominee) and it is ready to be issued to your creditors you must in effect deliver it to the Nominee with a notice requesting that they act as your Nominee. (In practice, I will provide you with a copy of the relevant notice, draft the proposals and agree the terms with you).
Providing I consent to act as your Nominee (assuming a proposal is drafted that you are happy with, and it fits with the Nominees duties), the Nominee then has 28 days from the date on which they agree to act, to convene a decision procedure and issue your Proposal to creditors. Your creditors must be provided with at least 14 days’ notice of the decision procedure and two days must be allowed for postage (but not more than 28 days’ notice). Your creditors will therefore be expected to make their decision approximately three weeks from the date on which we are appointed as Nominee.
Stage 3 - Supervisory Stage
Assuming your Proposal is approved by your creditors, the IVA begins, and you will be in a Voluntary Arrangement for a number of years or until the objectives of the IVA are met.
As Supervisor, the Insolvency Practitioners role changes to act as an intermediary to ensure that both you and your creditors adhere to the terms of your Arrangement, which is a legally binding contract between you. It should be noted that the Insolvency practitioners duty is to balance the rights and interests of all parties and not to favor any particular party.
As Supervisor, the Insolvency Practitioners role changes to act as an intermediary to ensure that both you and your creditors adhere to the terms of your Arrangement, which is a legally binding contract between you. It should be noted that the Insolvency practitioners duty is to balance the rights and interests of all parties and not to favor any particular party.
Your responsibilities
Your IVA can be cancelled by the insolvency practitioner if you do not keep up your repayments or keep to other terms of the IVA. If your IVA is terminated as a result creditors may continue action against you and the insolvency practitioner may make you bankrupt depending on the terms.
Public records
Your IVA will be added to the Individual Insolvency Register (a record of those in an IVA. It is removed 3 months after the end of the IVA.
Your IVA can be cancelled by the insolvency practitioner if you do not keep up your repayments or keep to other terms of the IVA. If your IVA is terminated as a result creditors may continue action against you and the insolvency practitioner may make you bankrupt depending on the terms.
Public records
Your IVA will be added to the Individual Insolvency Register (a record of those in an IVA. It is removed 3 months after the end of the IVA.
RELATED ARTICLES
- COVID-19: What to do if you are in an IVA
- COVID-19: What to do if you are in an IVA
OTHER SERVICES
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ADVICE ON THE OPTIONS
WHEN YOU DO NOT KNOW WHICH WAY TO GO, OR THE OPTIONS AVAILABLE TO YOU
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DEBT RELIEF ORDERS
AN ALTERNATIVE TO BANKRUPTCY FOR THOSE WITH DEBTS UNDER £20,000
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ADMINISTRATION ORDER
WHEN YOU'VE HAD A COUNTY COURT JUDGEMENT OR HIGH COURT JUDGEMENT AGAINST YOU FOR DEBTS UNDER £5,000
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A REPAYMENT PLAN WITH CREDITORS, WHICH IS NOT BINDING AND CAN CHANGE
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WHEN YOU ARE UNABLE TO REPAY YOUR DEBTS OR PROPOSE AN ALTERNATIVE REPAYMENT PLAN
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