Individual voluntary arrangement

It constitutes a formal repayment proposal presented to a debtor's creditors via an insolvency practitioner.

[1] (After taking independent advice, debtors with less serious problems may wish to consider a debt management plan.)

75% in value of those creditors who vote at the meeting by person or by proxy must agree in order for the arrangement to be approved.

If any of those voting are 'associates' (usually business associates, friends and family) then a second count is taken and 50% of non-associated creditors must approve it.

[2] IVAs were originally designed to provide relief to debts generated as a result of business insolvency.

These assets, such as high-equity properties and expensive cars etc., are not directly at risk under an IVA – as they may be in a bankruptcy.

[3] The advantages and disadvantages of an IVA compared with other debt solutions are particular to a debtor's individual circumstances and professional advice should be sought to decide on the best option.

Unlike bankruptcy, an IVA does not statutorily restrict a debtor from obtaining credit, although the proposal may do so.

A self-employed trader will have to disclose the fact that he or she is bankrupt when obtaining credit, for example when dealing with suppliers.

Both of these fees are paid as part of the Arrangement and are included in the monthly contributions made to the IVA.

These fees do not generally affect the total amount payable, but instead reduce the final dividend that each creditor hopes to receive from the IVA.

As a result, an Insolvency Practitioner must agree his fees with voting creditors before an IVA is accepted.

Category 1 disbursements are costs directly related to arrangement and payments made to any third parties.

Examples of this are business mileage, printing and photocopying and postage Perhaps the biggest advantage to an IVA over bankruptcy is the control the debtor may have over their home.

If an IVA fails because an individual can not keep up with the repayments (or agree new terms with the trustee and creditors), then bankruptcy becomes a real possibility.

[citation needed] In practice, the proposal is generally a standard document which is modified to the each debtor's particular circumstance.

From this, the debtor's disposable income is calculated (A)−(B) and this will become the amount that will be paid into the IVA periodically (usually monthly).

The ability to call future meetings of creditors in the event that circumstances change, to modify the terms of the IVA.

The debtor must comply with all reasonable requests of the supervisor, which may include periodically providing bank statements, accounts, wage slips etc.