An Individual voluntary arrangement (IVA) is an alternative to bankruptcy in some circumstances. An insolvency practitioner takes charge and a repayment plan is negotiated dependent upon income and expenditure. If 75% of creditors agree the agreement will become legally binding and bankruptcy is avoided if all of the payments are met. There is a fee for an IVA but this does not have to paid up front.
By applying for an IVA rather than opting to file for bankruptcy means that your assets will be retained, in bankruptcy these are shared out amongst the creditors, including property, businesses, pensions, life insurance and any valuable possessions. Further to this any credit cards and bank accounts will be closed. There are also restrictions placed upon you during the period which you are bankrupt (normally 12 months); your position must be declared when obtaining credit of over £250 or when trading in business. Once you are discharged you will be freed from most of your debts.
Both IVA’s and bankruptcy are types of debt solutions, bankruptcy being a more severe option, meaning that you lose any assets which you have. An IVA still requires some payment of some of your debts and is not suitable in all circumstances. It should however always be considered before applying for bankruptcy.
An IVA is a means of getting debt free without the stigma which is attached to bankruptcy. It is also means that when you get to being debt free you will retain the assets which you had originally, allowing for a life free from debt.
