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An Individual Voluntary Arrangement (IVA) is a formal agreement between a debtor and his or her creditors. An IVA proposal sets out how the debtor is going to repay the creditors, usually over a period of five years.
Due to its formal nature, an IVA has to be set up by a licensed Insolvency Practitioner.
The Insolvency Practitioner will then contact all creditors to advise them that proposals for an IVA are being prepared and ask them to confirm the amounts they are owed by the debtor.
A set of proposals will then be drawn up. These will include details of income and expenditure, creditor details, a short history of how the debts built up and a proposal for repayment (including the monthly repayment amount and the duration of the arrangement).
In some circumstances the proposals will be sent to the debtor's local County Court for approval with a request for an Interim Order. The Interim Order will protect the debtor from any further court action, including bankruptcy proceedings.
Creditors will then be sent a copy of the proposals, schedules and all the other details along with the date, time and location of the Creditors Meeting. A representative will chair the Creditors Meeting. The debtor will be expected to attend the meeting so that any points that arise may be clarified without further delay. For an IVA to be approved 75% (in value) of those who vote must agree. Once approved the IVA is legally binding on all creditors, even those who have not voted.
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