IVAs, or Individual Voluntary Arrangements, were first introduced into the UK as part of the 1986 Insolvency Act, and were specifically introduced to create a legal alternative to bankruptcy - which until then had been the only method of dealing with personal insolvency.
The introduction of IVA’s marked a significant change in attitude from the establishment towards its citizens, especially since the IVA provided some much needed debt help for professionals.
Before IVAs became available, professionals who became insolvent had no alternative to bankruptcy which, in many cases meant, under the terms of their professional code, they would be unable to continue to practice their chosen profession.
Even today, many professions have strict procedures in place to deal with members of their profession who fall into insolvency, with professional accountants, lawyers, Armed Service Personnel and even Police Officers all subject to the possible suspension of their right to practice in their field whilst under a bankruptcy order.
So, how does an IVA provide debt help to a professional who has serious financial problems?
Well, an IVA allows someone who is heavily burdened with personal unsecured debts an opportunity to propose a new and affordable agreement to their creditors, without the need to declare bankruptcy.
The IVA is therefore a suitable debt solution for a professional person to whom bankruptcy is not an option.
Under the standard terms of an IVA, and once it has been agreed, creditors forfeit their right to take any legal action against the debtor, they must also freeze the interest charges on the debts and refrain from adding any late payment charges - all of which stops the debt from continuing to escalate.
The IVA repayments in themselves may not be sufficient to repay the full debt but, again, under the standard term and conditions of the IVA, any unpaid debt must be written-off by creditors.
Also, an IVA is a private agreement, which means there are no public notices appearing in the Press, and the IVA applicant’s professional bodies and employers are not informed. This is totally the reverse from bankruptcy, where there is a public notification published in the Press, and the bankrupt’s employers are indirectly notified.
Therefore, any professional whose a member of a professional body that excludes Bankruptcy as an option, can seek debt help in the form of an IVA, which removes the threat of a creditor petitioning for their bankruptcy.
My IVA Adviser are IVA specialists, and can help you establish whether or not an IVA is your best available debt help solution.
My IVA Adviser operates a No IVA = No Fee policy.
If you would like to have an informal chat with one of our IVA advisers just call 0800 088 7503.
All calls are free and confidential.
For more information on the IVA’s Pros and Cons read our IVA FAQs.
Our aim is to offer ethical advice and debt help to find the most suitable debt solution available for each of our clients.
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