Insolvency Services

Become legally protected with an IVA

An Individual Voluntary Arrangement is a legal agreement with creditors that enables those struggling with debt to repay the companies they owe money to at a rate they can afford. An IVA provides legal protection to all parties involved once agreed.*

If creditors agree to an IVA, they are obliged to freeze all interest and charges on the accounts and write off a proportion of the debt at the end of the IVA term, which is normally five years.†

Many people with large unsecured debts prefer to enter into an IVA than to declare bankrupt, particularly since an IVA – if accepted by your creditors – leaves you in control of major assets such as your house.

The likelihood of your IVA proposal being accepted is connected to your degree of insolvency, as your creditors will want to know that they are likely to get more money back through accepting your IVA rather than pursuing the debt through a Bankruptcy petition.

What is an Insolvency Practitioner?

Proposing an IVA involves using a licensed Insolvency Practitioner (IP). This is a regulated profession in the UK and only individuals who have qualified under the Joint Insolvency Examination Board can practice as an Insolvency Practitioner. Baines & Ernst work in partnership with selected licensed Insolvency Practitioners which handle IVAs for our clients.

The service provided by an Insolvency Practitioner goes through a number of phases:

• The first phase is to ensure that you have all the necessary information regarding the solutions available to you and what they entail. If the best solution is an IVA, we will explain the process to you so you fully understand the terms of the arrangement.
• If you decide to go ahead with an IVA, we will help you complete an expenditure form which will outline your current debts, income and outgoings. This will then be passed to a licensed Insolvency Practitioner (IP) of our choice.
• The licensed Insolvency Practitioner will act on your behalf and create an IVA proposal which will be presented to your creditors. The IVA is subject to creditor agreement, which is not always guaranteed.  Therefore your Insolvency Practitioner must secure acceptance at 75% of the value of your debts for the IVA to go ahead.

Finally, if your IVA proposal is accepted, the Insolvency Practitioner becomes your Supervisor and will ensure that your IVA keeps on track. They may request extra information from you regarding your financial situation and how it changes over time. They make sure that the terms of the IVA are kept to by both sides. At the end of the period (usually five years), your unsecured debts will be considered cleared.

Discuss IVAs with our debt advice team

For confidential debt advice, speak to our expert team on 0800 096 1331.

*For an IVA to be approved and interest and charges to be frozen it needs to be accepted by 75% of the creditors (by value). †Homeowners may be required to re-mortgage after 4 years and release available equity to pay off some or all of the debt. Failure to adhere to an IVA may result in bankruptcy..