Individual Voluntary Arrangements

The fundamental message of this site is this: no matter how bad it gets, you can still take control of your debts. Even if the bailiffs, courts and creditors are hounding you, there are almost always solutions. Not extreme measures; actual, practical solutions. Solutions that will help you sort out your creditors, without detriment to your long term finances.

Even if you’re facing bankruptcy, there’s still hope. Individual Voluntary Arrangements (IVA) can give you that hope. An IVA is a real alternative to total personal insolvency. It can help you to regain control of your finances and thereby avoid the stigma of bankruptcy; not to mention the adverse impact on your credit rating.

So how does it work? An IVA is an arrangement with the County Courts. It ensures that a pre-arranged portion of your existing debts are paid off over a shorter period. That in itself means it’s not for everyone. You’ll need sufficient disposable income to pay off your monthly commitment, or the Courts won’t countenance the IVA arrangement in the first place.

You’ll be tied into the arrangement for a set period, probably between 3-5 years depending on the size of your debts and your ability to pay them off in that time. The advantages are that in addition to ‘cheating bankruptcy’ your debts will be reduced. An IVA is a ‘damage limitation’ settlement payment. You’ll agree to pay back a proportion of what you owe, and, provided your creditors agree, the rest of your debts will be written off. From your creditors’ point of view, it’s a compromise. They’ll only ever enter into an arrangement if they’re prepared to write off a slice of debt, in favour of short term restitution.

Provided you meet your obligations, whether for monthly payments or agreed lump sum payments, a further advantage of entering into an IVA is that your creditors can’t touch you. In fact you’ll cease interacting with them in any way, shape or form. The county court will take over, and they’ll handle the administration of the IVA and conduct all dealings themselves.

The procedure itself can be quite time consuming. That’s worth bearing in mind if you’re already down to the wire with your repayments. The sooner you act, the better your chances of securing an agreement. That’s not to say that eleventh hour deals are never done; so long as your nominated Licensed Insolvency Practitioner draws up a convincing argument, then chances are, it’ll appease all parties. If nothing else, you’ll get a little breathing space. The courts will impose an interim order, ensuring that your creditors can’t touch you whilst negotiations take place. This will always be within two weeks.

The terms of the deal will have to be sufficiently attractive to your creditors if they’re going to accept. But if the only alternative is bankruptcy, they’ll more than likely be prepared to forestall bankruptcy proceedings and play ball. Accordingly you don’t have to suffer any of the restrictions that would otherwise have been imposed by bankruptcy. And don’t forget, IVA proposals are drawn up by the debtor (in conjunction with the Insolvency Practitioner.) That means they should be in your best interests, as far as possible. That way they can be made flexible, and tailored to your circumstances. It also means you can exclude your personal property from the terms of the agreement, provided you satisfy your creditors that this is in everyone’s best interests.

An Individual Voluntary Arrangement is variously seen as a way of staving off bankruptcy and an eleventh hour survival package. Just remember, it isn’t a last resort; it’s a solution.