During the same time period, the number of Individual Voluntary Arrangements (IVA) increased significantly, reaching 10,041 cases. Nevertheless, as the UK's GDP growth plummeted to -6% in the second quarter of 2009, a record low since the end of World War II, the number of IVAs taken out increased to 12,623.
Within five years, the debtor is relieved of unsecured debt under an IVA. During this period, the debtor will make payments to the IVA based on their income and expenses. In order to petition for an IVA, the debtor must meet stringent requirements.
To qualify for an IVA, a debtor must meet the following requirements:
An IVA is typically appropriate for individuals who owe at least £15 000 to at least two creditors.
The debtor or their companion must have a stable income source.
While a homeowner's mortgage will be counted as part of the debtor's expenses, the property may not be counted as part of the debtor's assets, or the debtor may receive income-based contributions for an extended period in lieu of the debtor's equitable interest in the property.
In the event of a change in the debtor's personal circumstances, the Insolvency Practitioner will submit a revised proposal to the creditors for their consideration.
If the debtor cannot keep up with the IVA payments, a Bankruptcy Order may be issued. This occurs when the debtor is unable to make adequate payments on their debts. The assets of the debtor are managed by a trustee who may also supervise the debtor's finances.
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