Individual Voluntary Arrangements are typically a debt management solution based on income. It also offers the benefit of being binding on all creditors, including unsecured ones. This also implies that none of the creditors bound by the IVA can take legal action to collect the debt. They are instead required to submit a claim in the IVA and are compensated by the supervisor.
IVAs are an alternative to insolvency as a debt management strategy. These debt relief options are not, however, mutually exclusive. After being declared insolvent, an individual can propose an IVA. In the case of an IVA, however, the debtor must owe more than £15,000 to multiple creditors.
The IVA procedure begins with a creditors' meeting where the creditors to whom the debtor owes money evaluate the IVA proposal. The proposal for an Individual Voluntary Arrangement is then put to a vote by weight to determine its acceptance. The proposal can only receive a grade of d if creditors holding 75% of the total value of the debts vote in favor of it, but it can receive a grade of an if any of the voting creditors are """"associates"""". 50% of non-associate creditors must vote in favor of the Individual Voluntary Arrangement proposal in the event of a second tally.
Once the IVA proposal has been approved, both the debtor and the creditor are included on a public list of individuals who are insolvent. Despite appearing on the personal insolvency list, the debtor is still able to request credit. In addition, the debtor can continue to conduct business despite undergoing an IVA procedure.
Moreover, the debtor who undergoes an IVA procedure retains ownership of their residence. In contrast, an IVA may exclude all property, propose a refinance, or offer income-based payments over an extended period in lieu of the debtor's equitable interest in the property. However, the IVA administrator may register a restriction on the property to ensure that his or her approval is required prior to the sale or refinancing of the property.
As they are income-based, IVAs are a good method to deal with personal insolvency. This means that the debtor only repays what they are able to afford. Moreover, despite appearing on the Personal Insolvency Register, a debtor who undergoes an IVA procedure can still obtain credit and continue to conduct business.
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