Reasons for doing an IVA
The attraction for the individual is obvious;
Relief from the pressure of constant demands from creditors.
Certainty about what has to be paid and when.Once the Arrangement is complete, they have no remaining obligations whatsoever in respect of those debts.
The ability to negotiate a single deal with all unsecured creditors together, to which they are all bound.
Avoiding more extreme enforcement measures by creditors, including bailiffs or bankruptcy.
The attractions for the creditors are also considerable;
An end to costly enforcement proceedings.
Certainty about the final sums that they will receive.
A larger and quicker return than if the individual should go bankrupt.
Will doing an IVA prevent me getting credit?
There is no statutory bar to obtaining credit for those in an IVA. However, all IVA’s are registered centrally and credit providers will generally seek details about the success of an IVA before committing themselves to credit.
Is an IVA a public process?
Whilst the exact terms of an IVA are private to the individual and their creditors, the name and address of the individual is recorded at a central registry which is open to public search.
Who can do an IVA?
Nearly anyone can propose an IVA. Even a bankrupt can put forward an IVA, and get an early annulment of the bankruptcy, but only if they have not been discharged.
What assets should be included in an IVA?
Practically any asset that can be sold or realised should be included in an IVA. Creditors will expect most valuable assets to be included, e.g. equity in a property, any savings, a life policy, significant jewellery or a valuable car.
Can I carry on business in an IVA?
Yes. However, most IVA’s for the self-employed will contain provisions for monitoring the business and include certain restrictions on credit. IVA’s involving businesses therefore require special assistance and usually a more detailed proposal.
Will assets that secure borrowings be included in an IVA, e.g. the matrimonial home?
Those assets which secure borrowings cannot be sold or realised without the consent of the lender. If there is 'equity' in a secured asset, i.e. its value in excess of the amount owed, unsecured creditors will expect this to be taken into account as part of the IVA proposal. Whether a matrimonial home, or other secured asset, has to be sold as part of the IVA will depend upon the amount of 'equity', debt and circumstances of the individual concerned.
What assets can be excluded from an IVA?
As certain personal assets cannot be included in bankruptcies, creditors will rarely demand their inclusion in an IVA. Examples are –
Tools of trade.
A vehicle that is essential to a person in their work.
A pension fund.
An award of general damages for personal injury.
Having said this, if a person has a strong wish to avoid bankruptcy and has little else to offer they may choose to include these assets in their IVA proposal.
