Individual Voluntary Arrangements
An Individual Voluntary Arrangement groups together all unsecured creditors (those who are owed money but do not have specific security over an asset e.g. a credit card) and offers them a delayed payment structure often paying less than the full amount of money outstanding.
Assuming that you are earning a regular wage then an affordable level of monthly contribution towards your pre-IVA creditors is set and deducted monthly from your income.
Typically for an employed individual this may go on for up to five years.
Once an IVA is set up your creditors will have interest frozen and no further enforcement action can be taken by creditors against you.
What’s left unpaid of what you owed at the beginning of the Individual Voluntary Arrangement will be written off at the end of the IVA.
Costs of an IVA are taken from your monthly contributions and all fees are agreed with your creditors in advance of the IVA being approved.
There are two key stages to an Individual Voluntary Arrangement, the set up process leads to a creditors meeting to vote on approving your IVA. In reality voting by creditors is usually decided prior to the creditors meeting and the meeting itself is a largely a paper exercise.
The second stage is the receipt of agreed contributions from you and the payment of money over to valid creditors.
To undertake an IVA you will need to take on the services of a Licensed Insolvency Practitioner.
Please be aware that if you fail to keep up with agreed contributions under an IVA that it may lead to the IVA failing and you potentially being made Bankrupt.
It is therefore very important that you monthly contribution levels are set at realistically achievable amount.
Is a Voluntary Arrangement Right for Me?
An IVA is suitable for an individual who is unable to pay off all that they owe when it’s due for payment. An IVA can be an attractive option to all parties including those owed money as it often presents a better overall payment level than in bankruptcy.
Benefits of an Individual Voluntary Arrangement
§ A percentage of your debt can be written off with an IVA.
§ With an IVA, your monthly repayments are based on what you can afford.
§ Your creditors cannot harass you whilst the IVA is in place.
§ Once you have completed your IVA according to the specified terms then you are deemed to be debt free