An individual voluntary arrangement (IVA) is an alternative to bankruptcy. An IVA is a formal arrangement between you and your creditors to pay back all or part of your debts.It must be obtained by applying to the court with the help of an insolvency practitioner.
Steps
The first step towards obtaining an IVA is to find an insolvency practitioner. This person can be an authorised local practitioner such as an approved solicitor or accountant. You may also look to your local Official Receiver's office for an insolvency practitioner. Next, you will need to apply for an “interim order” with the court. This prevents your creditors from filing a bankruptcy petition against you while you apply for an IVA. Then, your insolvency practitioner will inform the court of the details of the proposal and will recommend whether or not a meeting of the creditors is necessary. If a meeting is to be held, the proposal and date of the meeting will be sent to the creditors. At the meeting they will decide whether or not to accept your proposal. If 75% of the creditors present agree, then the proposal will be accepted and it will become binding with you and your creditors. Your insolvency practitioner will then supervise the payments to all the creditors as agreed upon in the IVA.
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Costs and Timeline
If you are having financial difficulties, it's important to file for an IVA before you become bankrupt. There are certain situations where you might be able to file after bankruptcy has been issued, but there are quite a few restrictions. The cost of applying for an IVA will vary from one insolvency practitioner to the next. Because of this, it's important to ask what their fees are before you hire them. Some practitioners are solicitors while others are accountants, so you should expect to pay fees that are similar to other areas of practice within their field of work.
Advantages
There are quite a few advantages of using an individual voluntary arrangement over filing for bankruptcy. For starters, it will give you more control over how your assets are dealt with and how the payments are made. In most cases you will be able to negotiate with your lenders to persuade them to let you keep certain assets like your home. It is important to be flexible and responsible when negotiating the terms with your creditors. Another benefit is that you avoid the restrictions which apply to bankruptcy. Finally, the overall cost will be less because you won't have to pay many of the fees and expenses that are charged in a bankruptcy case.
Take Immediate Action
If you find yourself on the brink of bankruptcy, you will definitely want to consider applying for an IVA as an alternative. Not only does it give you more control over your assets and repayment, but you can avoid the stigma attached to being bankrupt.
Spencer Gordan is a finance consultant who is currently researching the Individual Voluntary Arrangement.
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