So how does an IVA actually work?

< Return to previous page

Due to the legal nature of this type of arrangement the process requires the input of a licensed Insolvency Practitioner who will set up the IVA acting as the administrator during the term of the arrangement. Their role during the process will be at the request of the lender or creditor to petition the high court with what’s called ‘protection of debtor’ through an IVA and to assess your financial situation and any assets you may have along with your income and expenditure for the purpose of agreeing manageable monthly repayments over the term of IVA.

The court will then request council with lender or creditor to discuss the proposed arrangement and seek their willingness to accept a 25% reduction in the amount owed. Subject to a satisfactory outcome the debtor and lender or creditor will enter into a legally binding contract overseen by the court and managed by the practitioner.

At the end of the five year term an interim court order is granted to the debtor and guaranteeing the debt is settle in full and that the lender or creditor will not continue to pursue you for any money. However should the contract be broken i.e. the debtor fails to meet the agreed repayments, the practitioner under the terms of IVA has the power to go back to the court and file for the individual being made bankrupt!

What are the pitfalls of an IVA?

Should you find yourself in this position an Individual Voluntary Arrangement (IVA) seems to or at least’s sounds better than bankruptcy doesn’t it? An IVA may look like the best alternative but it’s not without its pitfalls... more information