What is an Individual Voluntary Arrangement (IVA) by:Neil Parnham

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What is an Individual Voluntary Arrangement (IVA)

An individual voluntary arrangement begins with a proposal based on your financial circumstances and how much you are realistically able to afford to contribute towards an IVA, either on a monthly basis or from other assets you may own. The proposal is presented to the court and then to Creditors.

How does it work?

We tell the court the details of your proposal. A meeting of creditors is held, the date of the meeting and details of the proposals being sent to your creditors. Only those creditors who had notice of the meeting are bound by the arrangement, so it is important that you have accurate records of all your creditors' names and addresses. Otherwise, the arrangement might fail because we cannot contact all the creditors and, therefore, bind them to it.

At the meeting, the creditors vote on whether to accept your proposals. If enough creditors (over 75% in value of the creditors present in person or by proxy, and voting on the resolution) vote in favour, the proposals are accepted. They are then binding on all creditors who had notice of, and were entitled to vote at, the meeting.

We supervise the arrangement and pay the creditors in accordance with the accepted proposal.

What will an individual voluntary arrangement cost?

Costs are dependant on varying factors. The costs can be based on the duration of the voluntary arrangement, the work involved in advising and compiling the voluntary arrangement, prior to the meeting of creditors. We give an accurate estimate of your repayment costs and disbursements when we have your details, then once received the costs will be based upon your individual circumstances.

When can you make an individual voluntary arrangement?

It is better and cheaper for you to set up an individual voluntary arrangement before you become bankrupt, but you can propose one afterwards.

Are there any restrictions?

There is no maximum or minimum level of debt and no maximum or minimum level of repayments, except what is acceptable to your creditors. An arrangement might particularly suit you if:

- you have friends or relatives prepared to help pay or contribute towards paying your debts;

- your income enables you to pay regular sums to creditors.

What are the advantages of an individual voluntary arrangement compared to going bankrupt?

- It gives you more say in how your assets are dealt with and how payments are made to creditors. You may be able to persuade your creditors to allow you to retain certain assets (such as your home). You will obviously have to act responsibly and flexibly in order to reach agreement with your creditors.

- You avoid the restrictions which apply to a bankrupt

- Because you will not have to pay some of the fees and expenses which are charged in a bankruptcy, the overall costs are likely to be less.

Can an individual voluntary arrangement be proposed by a member of a partnership?

Yes. You can propose an individual voluntary arrangement on your own which must take into account the claims that the creditors of the partnership have against you personally. It will not affect the rights of the partnership creditors to take action against the partnership itself or against any other partner.

Alternatively, you and your partner(s) may wish to propose an arrangement involving the partnership creditors and the personal creditors of the partners. This can be done in two ways:

- the partners may propose interlocking voluntary arrangements, with each partner making proposals for their own debts and the debts of the partnership; or

- the partnership may propose a partnership voluntary arrangement (usually accompanied by voluntary arrangements for each partner).

We can help you to make proposals to creditors.

Warning: If you enter a voluntary arrangement but fail to give full details of your assets and debts or fail to do what you have agreed under the arrangement, then the insolvency practitioner, or any creditor bound by it, may still petition for your bankruptcy.

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About the author

Neil Parnham

Web Design - Programming and Multimedia Services at Digital View http://www.digital-view-web.co.uk

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