An Individual Voluntary Arrangement (IVA) is an alternative to bankruptcy. First
introduced in the mid 1980s, IVAs have, until recently, been almost exclusively
used by those in the know as a way of benefiting from the more advantageous
provisions of the bankruptcy laws but without the associated restrictions. But
the growth of consumer debt and the increased interest of the fee charging debt
management companies has led to more promotion and more take up.
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Individual Voluntary Arrangements
At best, an IVA can be an excellent solution for somebody faced with an overwhelming debt problem. At worst it provides a moneymaking opportunity for the increasing number of companies that advertise IVAs. You must make sure that this is a suitable option for you and that the company operating the IVA fully understand and represent your financial situation.
How It Works
A specialist insolvency adviser, called an Insolvency Practitioner, draws up a
proposal for you to repay a specified amount in full repayment of your debt.
The payment can be made in a lump sum or over a period of time – often up to
five years. The companies owed money agree to write off any debt still
outstanding once you have made the agreed payment. The amount paid under the
IVA is normally calculated with reference to the amount that would be collected
if you were to be made bankrupt.
There is normally no up-front fee to pay in using an Insolvency Practitioner –
the costs of the IVA are written into the arrangement. But you should be aware
that the costs can be high (we are talking thousands of pounds for even a
simple IVA). It is vital that you understand how the costs will affect how much
you will pay and the proportion of your payments that will be paid to your
Insolvency Practitioner rather than to repay your debt.
