Whats the legal position of an IVA?
Introduced as part of the Insolvency Act of 1986 an IVA is formal, legally bind agreement between An IVA is a legally binding agreement between a debtor, (a person with debts) and his creditors (the companies that he owes the money to) which acts as a legal alternative to bankruptcy.
Many professions including limited company directors, lawyers, solicitors, accountants, senior civil servants, police officers, prison officers and serving armed service personnel are prohibited from declaring themselves bankrupt.
To do so would likely damage their right to continue practicing their profession or, perhaps, even call for their immediate resignation.
A solution was needed to provide these professionals the chance to become debt free, without the need to declare themselves bankrupt and subsequently be forced to suffer the consequences of the bankruptcy process.
The Government IVA solution provides several legally binding benefits to the applicant:
- Private agreement. Unlike bankruptcy an IVA is not published in any media.
- Legal protection from creditor actions Once agreed, creditors forfeit the right to take legal action.
- Fixed repayment term. The IVA has a predetermined term of, normally, 5 years.
- Debt write-off. Any unpaid debt remaining after the IVA has completed is legally written off by creditors.
- Affordability. Payments into the IVA are based solely on affordability.
- Freeze in interest and charges. Once agreed, creditors are legally obliged to freeze interest.
- Protection of assets. An IVA protects assets that might otherwise be vulnerable under the bankruptcy process.
To qualify for an IVA an applicant must owe a minimum unsecured debt level of £10,000 which should be owed to a minimum of 2 different creditors.
The process of setting up an IVA can take between 4-6 weeks but, once the IVA is agreed, all parties are legally bound by its terms. This gives legal protection from creditors actions but, in return, gives creditors the chance of a better financial return than bankruptcy would have provided.
These are some of the headline points that form the basis for all Individual Voluntary Arrangements. If you would like to discuss the IVA process with one of our specialist advisers, just call 0800 088 7503 now for a confidential chat.
Or, alternatively, complete this form and we'll call you at your preferred time.