What is an Individual Voluntary Arrangement?
An IVA is a less formal procedure than Bankruptcy, and is available to insolvent individuals. The way it works is that you put forward a proposal to your creditors that asks them to agree to accept a certain sum of money in settlement of debts due. The proposal ring fences the debt up to that point and becomes part of the agreement. All future debt incurred is your responsibility and must be paid on time as agreed.
The proposal is very flexible and is put forward by you, on your terms, however your creditors can modify it. It requires the agreement from 75% in value of your creditors, but once it is approved it is legally binding on you and all of your creditors, whether or not they voted in favour of it.
You can then pay a monthly contribution, a one-off bullet payment based on asset sales, or a mixture of both. The appointed Supervisor then distributes the money to creditors after the professional costs of the arrangement have been paid.
What do I have to do?
You have to put together a proposal with the help of the Insolvency Practitioner. A statement of affairs, with details of assets and liabilities, must also be produced.
You will also be required to complete an income and expenditure form to ascertain how much per month you can afford to contribute to the arrangement.
How will Armstrong Watson help?
When you initially approach Armstrong Watson, we are appointed as Nominee. We then value all your assets and produce a statement of affairs showing why this option would be more favourable to your creditors over a Bankruptcy. Once the creditors approve the IVA, we become Supervisors of the arrangement.
Our duties include:
- Assisting you with drafting proposals
- Liaising with creditors to obtain relevant approval
- Filing all necessary paperwork
- Handling all correspondence from creditors
- Monitoring terms of proposal
- Agreeing creditor claims
- Paying dividends to creditors after costs
How long does an IVA last?
The duration of an IVA depends on how long you want it to last for, what the level of creditors are, and how much you can afford to pay into the arrangement.
How much will an IVA cost?
The Nominee/Supervisor is paid out of the arrangement. The costs depend on the complexity of the case and how long the arrangement lasts for. However, the Nominee may request a payment up front.