The Individual Voluntary Arrangement (or IVA)

Why you need advice about when to use an IVA.

If you are thinking about the possibility of entering into an individual voluntary arrangement then please read this first.

The individual voluntary arrangement was hailed as revolutionary when it was introduced by the 1986 act. Since that time many many arrangements have been entered into and many of them successfully.

However since the coming into force of the Enterprise Act 2002, the value of the IVA has diminished considerably.

This is because bankruptcy is now in essence a one year affair, possibly as little as three months. Moreover, creditors have adopted a really hard line towards this procedure, notably to begin with H M Revenue and Customs and, more recently, the banks and financial institutions.

Did you know that the number of IVAs which fail now is enormous? This is essentially because the burden of payments is so great and in addition creditors want properties revalued, usually after four years, so they can take the extra equity as well. And a failed IVA means that the debtor has paid a lot of money initially in fees and actually got nowhere.

We are not saying the IVA is a “bad procedure”; what we are saying is that its merits are relatively limited now and that it is generally not in the interests of debtors to enter into one. The procedure is expensive and many companies are making big money out of it to the detriment of the debtor and his creditors. You will see many companies offering you "free advice" about IVAs. Beware - they are trying to sell it you so their advice is most unlikely to be impartial and unbiased.

So before you allow yourself to be talked into this, take down to earth independent advice from someone other than the company proposing it to you or their associates. It may still be right for you, but then again, it may not and you need to know. Only a detailed consideration of your own specific circumstances will reveal whether it is of value to pursue.

For what it is worth it is now several years since Adrian Leopard & Company recommended to a debtor that an IVA was the best route forward for him. Check out your own position and if it is right for you we can also recommend a suitable local insolvency practitioner who can handle it for you.