Benefits and Advantages of an IVA

Advantages of an IVA (Individual Voluntary Arrangement )

For the Individual, Sole Trader or Partner

• Enables a Sole Trader or Partner to continue to trade and generate income towards repayment to creditors which would otherwise have a call upon the personal assets of the individual.
• No restrictions as regards personal credit although in practice can prove difficult to obtain.
• The proposals are drawn up by the Debtor and are entirely flexible to accommodate personal circumstances. An example of this may be to exclude the Debtor's property from the IVA assuming the Debtor can adequately satisfy creditors that the outcome would be better for them by agreeing to this than could otherwise be expected if a bankruptcy order was made.
• The Debtor does not suffer the restrictions imposed by bankruptcy, such as not being able to act as a director of a limited company etc.

For the Creditors

• The costs of administering an IVA are considerably lower than in bankruptcy, enabling a higher return to creditors.
• IVA's operate as an insolvency procedure and creditors can as a consequence of this, still reclaim tax and VAT relief as a bad debt.

Other Advantages of an IVA

• You may well be running a small business which would be difficult to keep going if you were bankrupt.
• You may be a profession where you could lose your job if you go bankrupt such as accountancy/police/armed forces.
• You may have access to a large lump sum and want a formal arrangement with your creditors to accept the lump sum and write off the rest of the debts.
• You may have a very high monthly available income to make payments.
• You will not automatically lose your house or other assets which can be kept out of the IVA with the agreement of the IP and your creditors, although the creditors will usually want most of the equity in your house. See the section on "Disadvantages of an IVA".
• You will not have the same restrictions on you as you would if you went bankrupt, e.g. you can still use your bank account without saying you have 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.

It is also often used by sole traders and Partners who have suffered problems with their business but wish to secure its survival as they believe it will be profitable in the future which will enable them to make a greater repayment to creditors than could otherwise be expected were they made bankrupt and the business consequently cease trading.

What to do next...

If you are unsure as to whether an Individual Voluntary Arrangement - IVA is the best way to solve your debt problems please call us on 0800 074 6918
If you wish to discuss the Individual Voluntary Arrangement - IVA procedure and understand how it can help you please complete the following form or telephone freephone 0800 074 6918.

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