An Individual Voluntary Arrangement (IVA) is an alternative for people looking to avoid bankruptcy; it is an agreement with the creditors of an individual looking to continue to pay their debts but, due to a change in financial circumstances, can no longer make the originally agreed repayments.
The individual’s circumstances are taken into account to make the agreement flexible and are based on a mixture of capital, income and other payments. When proposed, creditors will make a decision via a vote which must see over 75% agreement for an IVA to go ahead.
An IVA can be used as an alternative to bankruptcy; however they are not mutually exclusive. If an individual has filed for and been made bankrupt they can still arrange to apply for an IVA which would require approval of a proposed IVA and a Court annulment of the bankruptcy order.
Depending on the position of the individual debtor there can be advantages and disadvantages of an IVA, to choose upon the best option professional guidance is usually required. An IVA will not automatically limit the debtor from attaining credit but a proposal usually will.
Unlike with bankruptcy, an individual will not have to disclose the fact they have an IVA but some lenders will usually ask. An IVA will not be viewed as bad as bankruptcy by creditors as it shows a commitment to repayment however the existence of an IVA in the first place would suggest poor credit on behalf of the debtor and both will stay on the individual’s credit file for 6 years.
Once an IVA proposal has been agreed, a creditor is restricted by the decision and cannot take any enforcement action to recover the debt. In contrast to bankruptcy, an IVA proposal won’t often include the property of a debtor or in some cases the creditor may suggest a re-mortgage or offer a degree of income based contributions because of the debtor’s equitable interest in the property.
Do you have a problems repaying your debt, then visit The Debt Advisor to see if you could qualify for anIndividual Voluntary Agreement.
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