For people who find they simply can’t the payments for their debts, an Individual Voluntary Arrangement (IVA) is sometimes used to provide a legal solution to the problem. You may find some conflicting or even untrue information in advertising by some less conscientious companies who arrange them. This article explains our usual approach to help demystify them, how they are organised and successful completion.

Reviewing Your Finances at The Outset

Before we begin, if things seem a little confusing or you feel under some strain, be assured that many different types of people can find it somewhat overwhelming when they first begin to address debt problems.

If you can get competent professional advice at this stage, a good debt advisor can work with you to complete a confidential review of all your finances and formulate a realistic monthly sum to offer your creditors. They should be able to provide an opinion on whether it’s likely to be viable for both you and your creditors as the cornerstone of an IVA. If you both agree, they can then formulate your ‘Statement of Affairs’ detailing your current financial position and your debts. This statement would then be given to an Insolvency Practitioner (IP), in order to represent your proposal to creditors.

Before You Commit, Explore Any Other Options

Any information claiming to explain an Individual Voluntary Agreement should point out that they are long term agreements, typically lasting at least 5 years. So before you begin to commit, your debt advice team should be giving you all the information you need to appraise any other options legally open to you. You are then best placed to make your choice in your best interests and its worth bearing in mind that every situation is different, so there cannot be a ‘one size fits all’ solution.

Once you have considered all the options, if you are going ahead with this one, the IP normally makes a formal written proposal on your behalf addressed to your creditors. To indicate your consent to passing it to the creditors, you must sign it, witnessed by a solicitor or Commissioner of Oaths.

Your IP Addresses The Proposal To The Creditors

Next, your IP will present the proposal you have agreed to your creditors. They can respond to the IP in person, but it is common these days for them to do so in writing. They may ask for you to revise the proposal at this stage. When you reach the stage where 75% of the value of creditors agrees, the proposal is then considered binding on all creditors.

About IVAs After Legal Instigation

Each party is formally notified and it is usual for the same IP to become the individual responsible for co-ordinating the sale of any applicable assets. The IP will normally also check the monthly payments and other conditions the creditors have given within the agreement. This is where a competent IP is again essential, as you will see.

When The Agreement Finishes – How Do You Become debt Free?

Once everything is legally agreed, you have a monthly payment schedule. A skilled debt advice team and IP should have arranged a workable monthly amount for you. Providing you continue to meet the terms and conditions of the agreement, including those payments, when the agreement expires, any remaining debt from it is written off.

You should now have some straightforward information on what an IVA is, arranging one and what successful completion both means and brings you. Whilst this summary can help clear up some misconceptions, we cannot stress enough that individual advice is a key step you should take in tackling any debt problem.

By Paul Goodman



Throughout 11 years experience supporting people with debt problems (including help to successfully manage an appropriate http://www.debtoptions.co.uk/ivas Individual Voluntary Arrangement), our Directors know that there is no substitute for impartial advice to http://www.debtoptions.co.uk help with debt .