An Individual voluntary arrangement (IVA is a government alternative to bankruptcy. You may feel there is no other solution other than going bankrupt. This is where you can use an IVA. An IVA is a very common procedure extensively used in the UK. It is a procedure of making an offer to the creditor by the debtor. Established in 1986 by the Insolvency Act, the arrangement provides flexibility to the debtor and varies from case to case. The Act was designed to cancel or declare invalid the bankruptcy order through a voluntary arrangement.You can get immediate protection from the creditors by resorting to IVA. IVA enables you to repay your entire debt or a part of it over a period of time. Thus it gives you sufficient time to get out of the debt. The worst thing attached with repaying debt is the huge mental stress it puts on you and by using IVA, since you can buy some time, you can settle your debt with little worries. The creditor may or may not accept the offer made by the debtor. IVA can be used by individuals, partners or sole traders who are experiencing credit burden from their creditors. It is useful for people who own their own property and partners who are facing problems with their business. It is also used by sole traders who which to secure their debt for the present and gain more profits in future.
How Does an IVA Work
The IVA involves submitting a proposal to the creditors. At least 75% of the creditors must support the proposal. Once an IVA is approved, the creditors are bound to follow it. The IVA is a completely private agreement, the knowledge of which is not made public. Only the debtor, his advisors, and creditors know about the IVA. In certain cases, when a particular company that has lot of debt, if a bankruptcy is filed, the director has no powers and is removed from the position. However, if the IVA option is chosen, the director does not suffer. IVA enables individuals and traders to continue their routine work, including trading and generate income.
During the arranged period your financial status will be regularly reviewed to see if there has been any change in your financial situation. The IVA will be legally binding, so as long as you keep up with the repayments you have been set then you will be Debt free when your agreement term has finished.
It is the debtor's responsibility to pay the agreed payments to the IVA company who will then ensure that these payments are distributed to all creditors on a pro-rata basis in accordance with terms and until the successful completion of the IVA. It is in the debtors own interest to maintain their payments, as failure to pay will almost certainly result in the failure of the IVA. An IVA is an extremely powerful tool to clear any outstanding debt. As they are not freely advertised, they may not be as popular as bankruptcy but we are certainly noticing an huge increase on the number of people applying for an IVA.
