IVAs and the Self Employed

Being self employed does not exclude you from using an IVA to become debt free.

In fact, IVAs were originally introduced into the Insolvency Act 1986 to help struggling businessmen, particularly sole traders, deal with their indebtedness without the need to enter Bankruptcy.

Since then, IVAs have helped thousands of self employed sole traders have saved their businesses, avoided Bankruptcy and become debt free as a result.

How Can An IVA Help The Self Employed?

An IVA provides the self employed with an opportunity to reach a new and balanced agreement with all of their creditors, whilst enabling them to continue trading and avoid Bankruptcy.

Usually based on a 5 year term, the IVA offers creditors monthly repayments which are based on levels of affordability rather than contractual obligations. An IVA proposal is drafted, to highlight to creditors the contrast between the financial returns provided by the IVA in comparison to the projected outcome from bankruptcy proceedings.

Creditors are asked to cast a vote as to whether they accept the proposal and if 75% of creditors agree to accept the IVA it becomes legally binding on all.

An IVA can only be proposed through and administered by a licensed Insolvency Practitioner and it takes approximately 4 weeks to set up. Call 0800 088 7503 for more information on how an IVA works.

What about trade creditors?

An IVA deals specifically with unsecured creditors and it treats all unsecured creditors equally.

As a result, all personal debts must be included into, and be bound by, the IVA.

For a sole trader this includes all trade accounts and business loans, business credit card debts as well as bank overdrafts. Any other personal debts, like store cards, catalogues and credit cards are also included.

This can cause some embarrassment for some traders, as they will be unable to maintain multiple trade accounts.

Am I allowed any trade credit?

As a concession to sole traders it is possible, with the Insolvency Practitioner's prior permission, to keep one trade account active.

Self restraint will be expected to be shown on the account and levels of credit will need to be modest. The account must be used solely to fund client's works and the credit will be expected to be cleared within a reasonable time.

If you would like to discuss this point with an adviser please call 0800 088 7503.

Keep trading through

Traders can use an IVA to help keep their creditors at bay, thus removing the crippling costs of debt that can strangle a small business.

Business conditions have been very difficult in recent times. When trade is slow and the costs of running the business keep mounting, an IVA can offer the perfect respite from creditors demands.

In most cases it will be necessary for the trader to open a new basic bank account, to ensure that business cash flow is protected from potential creditors.

Get Professional IVA Advice

If you're self employed and considering whether entering an IVA is the right thing to do, please call 0800 088 7503 where one of the team is waiting to talk to you right now.

My IVA Adviser are professional IVA specialists. Our aim is to help people who are struggling with debt come to understand how an IVA would be applied to their personal circumstances.

All our consultations are free, you're not obliged to follow our advice and our conversation will be held in the strictest confidence.

To arrange a call with one of the team, simply complete this form and someone will call you at your preferred time.

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In accordance with the Financial Conduct Authority's guidance, please follow this link if you would like to read a free guide about In Debt - Dealing with your creditors
To find out more about managing your money and getting free debt advice, visit Money Advice Service , an independent service set up to help people manage their money.

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