IVA’s Rescue or Rip-Off

IVA’s Rescue or Rip-Off (Individual Voluntary Arrangement)

What is an IVA ( Individual Voluntary Arrangement )

An IVA is a legally binding offer to creditors by an individual, business (partners) or limited companies to either sell off any assets and/or make payments from future earnings or profits to pay unsecured creditors, either in whole or in part, and these arrangements, if voted in are binding on all unsecured creditors.

The normal timespan for an IVA is five years.

Huge Fees

One of the biggest problems with an IVA is the huge fees charged by insolvency practitioners, very often amounting to several thousands of pounds up front. If an IVA agreement is proved to be successful further huge fees are creamed off the cost of ongoing administration of an IVA.

Bankruptcy Clause

Many IVA arrangements contain clauses that require the terms of the agreement to be rigidly adhered to. Should a payment be missed, the person in the IVA can be made bankrupt.

Property Clause

Very often within an IVA there is a clause relating to the property. If an IVA runs for a term of five years, the property under an IVA is valued in year four. Should there be any equity in the property, the insolvency practitioner can request that the equity is realised, in order to pay the creditors.

If re-mortgaging is not available to release the equity, this may trigger an enforced sale!

Failure Rate

IVA’s have a very high failure rate, is very difficult to find true statistics through the Insolvency Service. I personally believe that this figure is very high because I have spoken to many people every year who are struggling to keep up with their IVA agreement.

Please be advised that this is my personal findings. Anyone looking to go into an IVA should find out as much information as possible, before signing the dotted line

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