An IVA is a legal contract between you and your creditors, it is a legally binding arrangement supervised by a Licensed Insolvency Practitioner, the purpose of which is to enable you to reach a compromise with your creditors and avoid the consequences of bankruptcy.

The IVA enables you to cut your debts to an affordable level and clear them over a fixed period. The compromise should offer a larger repayment towards your debt than could otherwise be expected were you to be made bankrupt. You can even take out a fresh mortgage while in an IVA. What’s more, it is a totally private arrangement – nobody needs to know about it apart from you, your advisors and your creditors. An IVA ensures that your home is protected and your job is not at risk.

You make one single manageable monthly payment, based on your budget, for 3-5 years. After that the remaining debt is wiped clean, leaving you completely debt-free. This means that an IVA can write off up to 75% of your debts.

However, under the terms of the agreement you undertake to contribute as much as possible within your budget. So in reality, an IVA presents an opportunity for you to pay whatever as you can in a manageable way – a way you can afford. 
Please see Pros and Cons of an IVA.

Who can benefit from an IVA?
An IVA is available to all individuals, Sole Traders and Partners who are experiencing creditor pressure and it is used particularly by those who own their own property and wish to avoid the possibility of losing it in the event they were made bankrupt.


How an IVA Works
1) Proposal submitted to court with a view to obtaining an Interim Order.
 
2) An Interim Order is issued by court stopping creditors from taking any action against you whilst a meeting of your creditors is called and held to decide whether the proposals are acceptable to them or not.
 
3) The following information will need to be gathered and presented as part of your IVA file:

• The Nominee’s comments on the debtor’s proposals
  
• The Proposals
  
• Notice of the date and location of the meeting of creditors to vote on your proposals
  
• A Statement of Affairs that lists your assets and liabilities and your income and expenditure
  
• A background statement that explains the circumstances that culminated in the IVA being required
  
• A schedule advising creditors of the requisite majority required to approve the IVA
  
• A complete list of creditors
  
• A guide to the fees charged by the Supervisor following approval of the IVA
  
• A form of proxy for voting purposes
  

Creditors Meeting
The creditors meeting is usually held 2-4 weeks after the above has been circulated to creditors. The purpose of the meeting of creditors is to agree or reject your IVA proposals with or without modifications which can be requested by creditors at the meeting.

Acceptance of the proposals requires 75% in value of those creditors who vote. The 75% relates only to those who actually vote, all will be bound by the terms of the arrangement whether they voted or not.
Upon approval of the IVA, a Supervisor is appointed (usually the Nominee) to ensure the proposals are adhered to and to distribute the dividends to creditors.
Assuming the debtor complies with the terms of the arrangement, upon completion of the IVA he will be fully discharged from all liabilities included within it.

To see whether an IVA is right for you try our IVA Wizard (right hand side of this page).