How To Start or Apply For An IVA?

IVA is Individual Voluntary Arrangement, this is actually a formal alternative to avoid bankruptcy. It is a contractual agreement between the person in debt and the creditors. It is flexible and considers the individual's own financial circumstances and it can be therefore based on capital, income, third party payments or a combination of these three.

For an IVA to start, the creditors must be flexible as they expect to recover more money from the borrower in debt. It is also expected that they have high hopes that the IVA has options favorable to them just in case the IVA does not get off to a good start. The IVA team will help you with the proposal to creditors and will be known as your 'nominee'. Should the creditors accept your proposal, an insolvency practitioner will become a supervisor of your IVA.

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A creditors' meeting will be held where your creditors or their respective representatives will agree or disagree on your proposal through voting. The implementation of your IVA will depend on their votes which in general should at least gather 75% votes from the representatives present in the meeting. Your creditors has an option to put forward changes on your proposal but it cannot be imposed unless you allow them to. Give sometime to think about it and do not agree unless you fully agree with the changes they made on the proposal.

There is no law that says that a person in debt is required to attend the creditor's meeting, but in practice you should be there for you to agree or disagree to any changes on your proposal. Should they add last minute changes to your proposal, feel free to ask for more time to think about them and ask your insolvency practitioner's private advice about the changes on the proposal.

An Individual Voluntary Arrangement is one opportunity for a person to avoid bankruptcy. If disapproved, a creditor may bankrupt you so it is always best to give your creditors an offer that you can live by. Honestly and transparency on your financial situation both to your insolvency practitioner and creditors are both needed.

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