An IVA is an agreement made between an individual and their creditors. Each arrangement is unique as it is tailored to the individuals personal circumstances and the people they owe money to.
Broadly speaking there are two types of voluntary arrangement: A short term IVA; or a contribution based IVA, usually for a period of 5 years. With both types of IVA a document called a proposal is prepared. This document lists the assets and liabilities of the individual and sets out how they intend to repay the money they owe to their creditors.
A short term IVA may illustrate that the individual does not have any surplus income at the end of each month, but does have access to a 3rd party injection or source of funds possibly from the sale of an asset or a loan from a relative who is prepared to give them a one off sum of money to be paid into the Arrangement and distributed to the creditors, for example giving the creditors a dividend of 50 pence in the pound.
A contribution based IVA may show that the individual currently has outgoings of £700 per month to pay various creditors eg, loans, credit cards, and store cards but is unable to keep up with repayments and realistically they only have £400 actually spare each month. In this situation the sum of £400 per month is paid to the Supervisor who periodically makes distributions to creditors. The £400 monthly contribution is likely to be paid each month for the next 5 five years giving a total of £24,000 which is then used to settle the liabilities in full and final settlement.
An IVA is a very useful insolvency tool to control all unsecured debts. The key advantage of an IVA is that it binds all unsecured creditors once it has been approved and documents their acceptance of the proposal even if they are not getting repaid in full.
Due to the unique nature of each individuals financial position and the attitude of their creditors every IVA is different and the above brief examples are only simple examples. Please speak to one of our advisors to discuss your circumstances and if an IVA is the right choice for you.
Bankruptcy is a formal Insolvency option for individuals and is one way of dealing with debts that you cannot afford to pay. Bankruptcy is a very efficient way of dealing with lots of unmanageable debts and effectively wiping the slate clean, however there are some debts which are not dealt with by bankruptcy.
There is a defined process which is contained in the Insolvency Act 1986. There is a beginning and an end to this option.
One key advantage to bankruptcy if you feel this is the appropriate route for you is that as an individual you will only be bankrupt for one year unless the automatic discharge is suspended for reasons of misconduct.
Historically there was a very strong stigma attached to the notion of Bankruptcy and whilst this has reduced over recent years as reflected in the national insolvency and bankruptcy statistics some people do struggle coming to terms with the thought of going bankrupt even though it may be the most appropriate option for them. Speak with one of our advisors in confidence and free of charge to identify of bankruptcy is the most appropriate choice for you to bring your finances under to put their finances back and make a fresh start.
Partnerships and members of a partnership can seek the financial assistance governed by an Individual Voluntary Arrangement ( “IVA” ) either acting alone or with the other partners of their respective business
A Partnership Voluntary Arrangement similar to an IVA is a formal insolvency option, however as with IVA’s each proposal is unique and offers great flexibility to suit the specific circumstances of the partners.
PVA’s are especially useful for individuals in industries or professions which cannot practice if they are declared bankrupt.
For more detail on how IVA’s work please see our IVA section then contact a member of Rushtons to discuss how this can be applied to your partnership.