Individual Voluntary Arrangements (IVAs)

This is another way out of debt. An individual voluntary arrangement (IVA) is a guaranteed way of avoiding bankruptcy and its attended implications. This is achieved by entering into an agreement formally with your creditors specifying how much percentage of the debt being owed will be paid and also the time span for payment. This agreement can only be validated and presided over by an insolvency practitioner. It is quite appealing because you have some form of control over how your assets are managed.

Who needs an IVA?
Generally, IVA’s can be said to be suitable for those who are in dire need of an option to bankruptcy but have a steady income and have either borrowed beyond limit or are committed beyond measure.
With IVA, the creditor agrees on a gentlemanly arrangement of writing off a part of the debt owed by the debtor while in turn, the debtor agrees to a fixed arrangement that involves a fixed payment from their monthly income towards the debt owed and this lasts for a period of time – say five years.
It is noteworthy to mention here that for an IVA to work successfully, the creditor must be in a position to receive more numerations than would have been possible if the debtor went bankrupt. Also, the debtor is required to be truthful when declaring his assets so that a proper inventory could be put in place to evaluate the debtor’s holdings.

What is the process of obtaining an IVA?
Basically, working with the information provided by the debtor, the insolvency practitioner (or nominee) drafts the proposal which is submitted to the court. The purpose of this action is to obtain an Interim Order from the court which acts to restrain creditors from disturbing the debtor. While this is going on, a mandatory meeting between all the creditors is scheduled to deliberate on the terms of the IVA proposal, with the view of accepting them or otherwise. If approved, the creditors then proceed to nominate a supervisor who will preside over the proceedings and ensure that all the terms of the IVA are adhered to. In most cases, it is the nominee who is eventually selected as the supervisor.

IVA versus Bankruptcy
An IVA is often considered as an alternative to bankruptcy. A debtor can intend for an IVA after he has been proclaimed bankrupt. If his application for IVA is approved after his bankruptcy then he can go to the Court seeking an annulment of the bankruptcy order. In case of an IVA proposed after a bankruptcy order, an Official Receiver can be nominated as the supervisor of the arrangement. The Arrangements offered by the Official Receiver are not very popular, as they are considered very restricted.

What are the Gains of an IVA?
The gains of an IVA are quite numerous and beneficial to both parties – the creditor and the debtor. Some of the gains available to the debtor are listed below:
1. The inconveniencies of bankruptcy will not be experienced by the debtor.

2. Since the proposal is actually drawn up by the debtor, it allows for room to exercise some preferential actions by the debtor.

3. The Insolvency Practitioner will aid in drawing up a workable payment plan which is suitable for the debtor.
4. Due to account of the Interim Order obtained by the insolvency Practitioner during the application for the IVA, there won’t be any further count on charges or interest on the debt.
What are the Downsides of an IVA?
It is often commonly said that whatever has a good part carries within it a bad part. Well, IVA’s are not left out from this common saying too.
The Downsides of having an IVA includes:
1. The debtor still stands the risk of being made bankrupt if he defaults in his monthly payment.

2. Failure to comply with the laid down rules of the IVA exposes the debtor’s assets to harm, most especially if the assets were not specifically detached from the IVA proposal.

3. The IVA restricts the debtor to a strict budget for a period of five years.

4. The debtor is required to declare all assets. If it is discovered that the debtor has assets amounting to an extreme value, the creditors have the right to make demands on those assets.
In managing a debt challenge, applying for an Individual Voluntary Arrangement – IVA could just be the lifeline that you have been looking for. It will certainly favor you to play along with the laid down guidelines and soon enough you will be out of your debt problem.

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