An Individual Voluntary Arrangement (IVA) is best summarised as: An arrangement between a debtor (you) and his creditors (people you owe money to).
1. The debtor pays back to the preferential and unsecured creditors "X" pence in the pound over a period of years (usually between 3 and 5 years). Secured creditors are unaffected by the IVA.
2. The debtor does this by selling assets and/or making voluntary contributions (after deducting reasonable domestic living expenses) to his creditors. The voluntary contributions are normally paid every month.
3. The arrangement is supervised by a licensed insolvency practitioner, who holds the funds on trust and distributes the funds pro-rata to creditors - usually annually. The supervisor must ensure that the debtor complies with the terms and conditions of the IVA.
The proposal is made under the formal procedures of the Insolvency Act 1986.
1. It must be approved by 75% of the creditors who are present (either in person or by proxy) and voting at the meeting. The creditors' votes are taken on a value basis. The creditors have the option to accept, reject or modify the proposal.
2. If the proposal is approved, it is binding on all creditors - even if they did not vote or voted against the proposed arrangement.
