Individual Voluntary Arrangement (IVA): The Perfect Debt Solution

The Individual Voluntary Arrangement or IVA is one of the two options that you have when have debt problems and you do not have any more resources to pay off your debts. The other debt solution option is bankruptcy. The IVA is generally a private issue between you and your creditors, those who you have the debt problem with. A nominee or a supervisor can lead the agreement discussion and act similarly to a trustee in the case of bankruptcy.

When you go into an IVA with your creditors, they have to choose between two options. Either they have to agree to some deferment with regards to the time of debt payment or they have to agree to accept a payment that has a value which is less than 100% of the outstanding debt and agree that this is then the final and full debt settlement. The terms of an IVA are usually flexible, taking into account your current situation. Such factors include your current income, existing capital, and probable payment assistance from other parties or a combination of such sources of debt repayment. You may actually opt to surrender all your assets or create a proposal that is suited to your current circumstances. The proposal may include your repayment capability, which is evaluated next to your assets, income and also payments taken from other possible parties.

Rather than find you way through the process of setting up an IVA there are expert debt management solutions companies who can assist, making the whole process a lot easier and less time consuming for you.

It is generally more advantageous if you file for an IVA before you declare bankruptcy but you could also get one after you have filed for bankruptcy. So what exactly are the differences between these two debt solutions?

Getting an IVA Before Bankruptcy

An individual debtor is the only one who could make an IVA proposal. Corporations or joint debtors are not allowed to jointly propose an IVA but each person could do so individually. Your proposal should include details like your assets and liabilities, estimated IVA cost, an explanation of why you seem to think that an IVA is better for you and why your creditors should agree with you. Once you have given your proposal, the creditors will schedule a meeting to vote on your proposal based on the credit exposure. Your proposal will be approved if you get at least 75 percent of 'yes' votes and that at least 50 percent of it is unconnected.

Getting an IVA After Bankruptcy

In this instance, your IVA proposal is agreed with the official receiver and then filed with the court. Your creditors will not be called to a meeting and you will not be allowed to modify the IVA proposal. The official receiver sends out the proposal to your creditors and then they respond in writing with their agreement or disagreement to the proposal. If your creditors approve it, then the receiver becomes the supervisor of your IVA and also notifies the court about it. The court then annuls your bankruptcy order. A lot of people find these arrangements too restrictive and therefore do not like this method.