Process
Creditors take a decision at a creditors' meeting called to consider the IVA proposal. The return to creditors is often higher than they would receive in bankruptcy. A vote is taken - by value. 75% in value of those creditors who vote at the meeting by person or by proxy must agree in order for the arrangement to be approved. If any of those voting are 'associates' (usually business associates, friends and family) then a second count is taken and 50% of non-associated creditors must approve it.{Insolvency Rules 1986 as amended}
IVAs were originally designed to provide relief to debts generated as a result of business insolvency. In recent years, increasing levels of consumer debt has led to many insolvent individuals with non-business generated debts seeking the legal protection offered within an IVA. IVAs may be popular with people who have large amounts of assets which they wish to protect. These assets, such as high equity properties and expensive cars etc., are not directly at risk under an IVA – as they may be in a bankruptcy.
Read more about this topic: Individual Voluntary Arrangement
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