Individual Voluntary Arrangement – IVA
If you’re a sole trader or partnership that’s facing financial difficulties, or an individual who’s suffering from historic debts, an Individual Voluntary Arrangement, or IVA, could give you much-needed relief from financial pressure. We’ll show you how it works now.
If you need advice urgently, our licensed insolvency practitioners and business rescue advisors can talk you through your options.
What is an Individual Voluntary Arrangement?
An Individual Voluntary Arrangement (IVA) is a business rescue process used by an insolvent individual. You could be a sole trader, partnership or have personal debts.
Unsure of you’re insolvent? If you’re a sole trader or partnership, being insolvent means you can’t pay one or all of your creditors on time or in full. You can take our cash flow and balance sheet tests to get a better idea. Personal debts might include store cards and credit cards that you cannot pay back.
The IVA puts a halt on your debts and protects you from any legal action being taken by your creditors.
How does an IVA work?
Working with a licensed insolvency practitioner, a legally binding agreement is made between you and your creditors to make reduced payments over a three- to five-year period. At the end of the agreed time, the rest of the debts will be written off.
If you have any inheritance, bonuses or pay rises in the period covered by the IVA, your insolvency practitioner will request that this money is paid into your repayment. Any equity you have in your home will have to be released six months before the end of the Individual Voluntary Arrangement and added to your last set of payments. This can be done by mortgaging the property.
Limited companies that are struggling can use a similar tool called a Company Voluntary Arrangement to address their debts. You can find out more about it here.
If you’re facing difficulties with cash flow or outstanding personal debt, an IVA can relieve the pressure of repayments. As licensed insolvency practitioners, we can give you expert advice on your current challenges and could help you achieve solvency with an Individual Voluntary Arrangement.
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