An IVA is an alternative to bankruptcy. It is a legal process that gives an individual struggling with their debts protection from creditors.
The procedure enables the individual to put a proposal to his creditors for a composition in satisfaction of his debts or a scheme of arrangement of his affairs. A composition is an agreement under which creditors agree to accept a certain sum of money in settlement of the debts due to them. The procedure is extremely flexible and the form which the voluntary arrangement takes will depend on the terms of the proposal agreed by the creditors.
Typically, an IVA lasts for between one to five years, during which time interest on debts is frozen and repayments are made to creditors from the realisation of assets or from contributions made out of earnings. The agreement requires the approval of at least 75 percent in value of the creditors who vote, and once approved, is legally binding on the individual and all his creditors, whether or not they voted in favour of it.
A proposal for an IVA may be made by a debtor even if he is already subject to bankruptcy proceedings.
A free guide to IVAs ’Is a Voluntary Arrangement Right for Me?’ can be made available upon request.