IVA or Individual Voluntary Arrangement
An IVA or Individual Voluntary Arrangement is similar to debt management in that it involves negotiating new repayment programmes with all your creditors.
The difference is that IVAs are legally binding, and can only be arranged by a Licenced Insolvency Practicioner.
Why choose an IVA?
An IVA is not be taken lightly, but is an alternative to bankruptcy which allows you to hold on to your personal assets while being given extra time to repay your debts.
Unlike bankruptcy, while you are in an IVA, there are no restrictions on your financial activies, but in practice it won't be easy to get credit of any kind.
How to set one up
As an IVA is a form of insolvency, you can only enter into one with the aid of an insolvency practioner licenced to work in this area.
Briefly, you need to make an accurate representation of your debts, assets, and income, known as a Statement of Affairs. This will allow you to propose a reasonable, achievable repayment schedule to your creditors, which should ideally give them a better option than forcing you into bankruptcy.
This proposal is submitted to the court, which will grant an interim order stopping any further action by creditors until it can be decided whether the IVA is acceptable or not.
A meeting of creditors will be arranged, with all creditors listed in the Statement of Affairs notified. Those who decide to attend the meeting will vote on whether or not the arrangement is acceptable.
If 75% of those who vote agree, then the arrangement becomes binding to the debtor and all creditors named on the statement, whether or not they individually attended the meeting or voted in favour.
Once the arrangement is in place, the insolvency practitioner will monitor repayments to make sure the terms are being kept to, and so long as this is the case, then no further action such as bankruptcy can be taken against the debtor.