Debt help for Professionals.
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 formal solution for dealing with serious levels of personal insolvency.
The introduction of IVAs marked a significant change in attitude towards personal indebtedness, particularly as the IVA legislation provided some much needed debt help for professionals.
Alternative To Bankruptcy
Before the option of an IVA was introduced, professionals who became insolvent had no alternative to deal with their debts, other than taking the bankruptcy route.
For many professionals this would constitute a breach in the terms of their professional code, resulting in sanctions being imposed by their professional body, leading to a removal of their right to practice.
Even today, many professions have strict procedures in place to deal with members of their profession who become insolvent, with professional Accountants, Company Directors, 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.
Debt help through an IVA
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 unsecured debts, the opportunity to put forward a new payment arrangement to their creditors, which avoids the need to declare themselves bankrupt whilst providing creditors with a better financial return than they could expect by petitioning for the applicant's bankruptcy.
The IVA, therefore, acts as a viable alternative debt solution for any professional to whom bankruptcy is not an option.
Once the IVA proposal has been accepted by the necessary majority of creditors it becomes legally binding on all. Even those that voted to reject the IVA are legally obliged to adhere to its terms.
Amongst many other things, all creditors forfeit their right to take any legal action against the applicant, as part of the standard terms of an IVA once the proposal has been accepted.
By protecting the applicant in this way, and by virtue of the fact that the agreement is a private arrangement, voluntarily entered into by all parties, the threat of professional sanctions are removed.
Protecting the applicant's income stream is undoubtedly in the interests of all parties and, for this reason, IVA proposals from professionals are generally met with a recognition that there is a mutual benefit to all involved.
And, on this point, the IVA differs substantially from the bankruptcy process as no publication of the IVA will appear in the Press and the applicant's professional bodies or employers are not informed.
Other major IVA benefits
When the IVA proposal has been accepted, creditors must freeze interest charges on the debt and refrain from adding any late payment charges too. These actions stop the debt from continuing to escalate.
Property owned by the applicant is also protected by the IVA.
Rather than being able to force the sale of the property, creditors have to make do with a structured process determining how embedded equity will be released. And if it can't be released at the relevant time the onus to do so is removed.
IVA contributions are based on affordability, yet the IVA has a prearranged fixed duration. This means that there is a real possibility the original debt level at the commencement of the IVA might not be fully repaid within the IVA term.
Consequently, under the standard term and conditions of an IVA, any unpaid debt remaining after the successful completion of the IVA must be written-off by creditors.
For more information on the IVA's Pros and Cons read our FAQs.
Free IVA consultation
Any insolvent professional who's a member of a professional body that excludes Bankruptcy as a debt solution can seek help in the form of an IVA.
As IVA specialists, the team behind My IVA Adviser can help you establish whether an IVA is a viable debt solution for you based on your current circumstances.
My IVA Adviser operates a No IVA = No Fee policy.
So, if you would like to have an informal chat with one of our IVA advisers just call 0800 088 7503 and all calls are free and confidential. Our aim is to offer you clear advice to find the most suitable debt solution for you.
If you'd prefer to arrange for us to call you simply complete this form and an adviser will contact you at your preferred time.