What is an IVA?
An IVA is a formal insolvency procedure which seeks to offer debt forgiveness, therefore you (the Debtor) makes a formal offer to his/her creditors in Full and Final settlement of your debts. Under current English insolvency legislation, only a licensed Insolvency Practitioner (IP) can act as a Nominee and then Supervisor of an IVA.
The Debtor's offer must be presented to creditors in such a way as to make it beneficial for all parties concerned. Since the Arrangement usually is for any period from within a year to five, if it is too restrictive the chances of the Debtor successfully completing the Arrangement are small. If the Nominee suspects that the Debtor will struggle to meet the future financial commitment, s/he must state this in their Nominee's Report & Comments. The IVA is based on your individual situation but be aware that currently the minimum that creditors will normally accept is a dividend of approximately 25p in the pound. Therefore, if you are unable to discharge a quarter of the total amount of your debts over a period of up to 5 (five) years, then this is not a suitable insolvency procedure for you. This amount must also include the associated fees.
Fees differ depending on the complexity of your individual circumstances and the amount of work involved or anticipated by the IP. Fees can be taken on a fixed fee or time cost basis, but ultimately the creditors must agree with all aspects of the Arrangement, since it requires their approval upon a simple two-tiered voting system.
What are the benefits of an IVA?
The creditors in an IVA, as long as they are entitled to claim in your IVA, upon the acceptance of your Proposal, are bound by the terms and conditions with or without any modifications which were made and cannot demand that the dividend is not suitable. There are exceptions but this is generally the rule.
What are the disadvantages of an IVA?
Some people do not want to keep on paying their creditors and after an in depth discussion and review, bankruptcy is a better solution.
Failure to comply with the Terms and Conditions of an IVA will result in the failure of the IVA and the Supervisor may have to petition for your Bankruptcy.
It is also a criminal offence to falsify evidence or mislead the IP or creditors to get the IVA approved. Upon discovery of any misdemeanour of this nature, the Supervisor is obliged as an officer of the court to report the matter to the Official Receiver and the Debtor can be subject to imprisonment and/or a fine.
Do NOT enter into an IVA lightly as Bankruptcy can result if it is rejected or failed due to non-compliance.
How Breathe Financial Can Help
At Breathe Financial Solutions, we can help you determine if an IVA is the right solution for your situation. Our team works with experienced, licensed Insolvency Practitioners to ensure your IVA proposal has the best chance of acceptance.
We provide:
- A thorough assessment of your financial situation
- Clear explanation of all your options, including IVAs and alternatives
- Support throughout the entire IVA process
- Help with communicating with creditors
- Ongoing guidance to ensure you successfully complete your IVA
Taking the first step toward debt freedom starts with understanding your options. Contact us today for a free, no-obligation consultation to discuss whether an IVA might be right for you.