Today I’d like to talk to you about Individual Voluntary Arrangements.
Your insolvency practitioner will apply for an interim order from the court which will stop your creditors from taking any action such as bankruptcy for the debts that you owe them. A proposal is made on your behalf by your insolvency practitioner to your creditors and they will vote whether your proposal should be accepted or rejected, normally a majority vote of more than 75% will determine whether your proposal will be legally accepted or rejected. If your proposal is accepted then your insolvency practitioner will carry out the proposal and your creditors will be paid out in accordance with the agreement.
For a start an IVA is less severe and less stigmatized compared to filing for bankruptcy? If your IVA is accepted you will not be publicly announced whereas you will for bankruptcy. If you own a business you will be able to continue trading in your business. After 5 years any additional debt will be written off meaning you will most likely pay back less than what you owed. Your insolvency practitioner will make sure you only pay back what you can afford.
There are also a number of disadvantages when considering an IVA, your credit rating will be affected should your proposal be accepted, You will need regular income to pay off the IVA agreement and failure to fulfill your obligation can lead to a forced bankruptcy. The IVA will claim an interest in the equity on your property either through mortgages on the property or through the sale of your property. The cost of an insolvency practitioner can be expensive and you will be monitored by your insolvency practitioner so if you earn more than the amount you pay towards your IVA will also increase.
As always it is advisable to speak with a professional expert when making any financial decision. The Consumer Credit Counseling Service, Pay Plan, and the Citizens advice bureau can offer you free debt advice for help and information on Individual Voluntary Arrangements.