Individual Voluntary Arrangement (IVA) Overview
There is an alternative to bankruptcy called an “Individual Voluntary Arrangement” (IVA). This is a formal arrangement through an insolvency practitioner to pay an agreed amount off your debts over a fixed period. This usually means paying a monthly installment usually over 5 years. The rest of the debts are written off.
Some IVAs are set up on the basis of using a lump sum (e.g. from a remortgage) to make offers to the creditors rather than make monthly payments. Some IVAs are a mixture of both. If a creditor is petitioning for bankruptcy the debtor can apply for an Interim Order which will stop all court action for 28 days. Only one Interim Order can be applied for within 12 months. Since the Insolvency Act 1986 was updated in 2000 it is no longer obligatory to apply for an Interim Order before applying for an IVA.
The corporate version of an IVA is an CVA (Company Voluntary Arrangement), which would run in a similar line to that of an IVA with the agreement with creditors relating to periodical contributions, interest in assets, third party payments and would usually have the effect of paying creditors less than they are actually owed.
Read more about this topic: Insolvency Service
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