IVA: Individual Voluntary Arrangement
The Individual Voluntary Arrangement (IVA) was introduced by the Insolvency Act of 1986. It is regarded as a substitute of bankruptcy. IVA is beneficial for both of the debtor and the creditor. Rather than going to face bankruptcy, Individual Voluntary Arrangement enables the people to come into a formal agreement with the creditors.
This system offers a great opportunity to those persons who are facing serious obligations to both escape bankruptcy and have a fresh start.
The Advantages of an IVA
An IVA offers you the opportunity of paying back only an established percentage of the total debts.
In such period, while you are in an IVA with the creditors, it is unlawful for these creditors to pursue you.
One of the major advantages is, in IVA, the interest on the loan gets frozen so in that situation, there is no chance to grow your debt.
An Individual Voluntary Agreement has no effect on your capacity to access public office as the bankruptcy does.
The Disadvantages of an IVA
In the world, there is nothing without having good and bad sides. IVA also possesses the same properties. We’ve discussed about the advantages of an IVA. Now let’s know some disadvantages too.
If you fail to stick on the conditions of your Individual Voluntary Agreement, then the appointed insolvency practitioner or the creditors may make you bankrupt. So, all your attempts can go in vain.
If your situation alters and you can no more afford the payoffs, it may cause the end of your IVA if the insolvency practitioner cannot persuade the creditors to enter into a new agreement.
Setting up an IVA
At first make an outline of the debt repayment proposal that evidently demonstrates its benefits to the creditors and also expresses which assets and funds will be available to them.
Then you have to apply to the court for granting an interim order. Once the order is granted, the creditors will not be able to file bankruptcy petition against you.
Now the creditors will come to a decision whether they will accept or reject your proposals.
If the creditors accept your proposals, they will be bound on everybody who was notified in the decision making meeting. If it happens, the insolvency practitioner will take charge of these assets which are managed for the creditors in the proposal line.
Recommended IVA Body
There are many IVA consulting firms in the UK. Choose any one from these firms to get assistance regarding this issue. To learn this issue in more detail you may like to check out this governmental document
( HYPERLINK “http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/con_doc_register/proposedchangestoIVA.pdf” http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/con_doc_register/proposedchangestoIVA.pdf).
Who might be benefited from an IVA?
An IVA can help anyone who is experiencing debt problems. Mainly IVA is preferred by those who own assets and there is a risk of losing these assets in case of bankruptcy. You may choose an IVA if you owe to the parties who would not accept an informal agreement for debt management. Even after getting bankrupted you may get an IVA according to the enterprise ACT of 2004.