Bankruptcy

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Individual Voluntary Arrangement

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What is an IVA?

Individual Voluntary Arrangement otherwise known as an IVA is a procedure arising from Part VIII of the Insolvency Act 1986 and is in essence a contract between an individual and his or her creditors which allows the individual to delay or compromise the payment of debts. An IVA is flexible and can be adapted. 

 

An Individual Voluntary Arrangement is the major alternative to an individual being subject to bankruptcy.

 

In essence, an IVA will substitute the terms of the person’s existing contracts with his or her creditors with the terms set out in the IVA proposal. For example, the proposal might require the person to pay a fixed monthly sum into the arrangement for a period of say five years so that creditors receive a dividend.

 

An Individual Voluntary Arrangement is a proposal to creditors and the term and amount of payments can vary pending on the circumstances and can potentially be modified by creditors. We can assist you and carry out a review of your affairs to ascertain whether an IVA is appropriate for you. We can then help in the drafting of the proposal.

How the repayments work

If you decide to get an IVA, you will work out a repayment plan with the insolvency practitioner. This could be monthly payments, a lump sum or a combination of both.

 

The repayment plan should be based on an amount you can reasonably afford and the creditors will need to agree it. If you’re making monthly payments the IVA will usually last for 5 or 6 years.

 

Any repayments will be paid directly to the insolvency practitioner. They will then distribute the money to your creditors. Some of this will be kept by the insolvency practitioner to pay their fees.

 

If the payments you make aren’t enough to pay your debts in full by the end of your Individual Voluntary Arrangement, you won’t have to pay the rest. The insolvency practitioner should advise you about this.

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