Key Components for a Successful IVA

The IVA must offer a higher return to creditors than could otherwise be expected were the Debtor to be made bankrupt.

An honest declaration of your assets and/or anticipated future earnings should be made. Material or false declarations are likely to result in the subsequent failure of the IVA.

Advantages of an IVA

Individual, Sole Trader or Partner

Enables a Sole Trader or Partner to continue to trade and generate income towards repayment to creditors which would otherwise have a call upon the personal assets of the individual.

No restrictions as regards personal credit although in practice can prove difficult to obtain.

The proposals are drawn up by the Debtor and are entirely flexible to accommodate personal circumstances. An example of this may be to exclude the Debtors property from the IVA assuming the Debtor can adequately satisfy creditors that the outcome would be better for them by agreeing to this than could otherwise be expected if a bankruptcy order was made.

The Debtor does not suffer the restrictions imposed by bankruptcy, such as not being able to act as a director of a limited company etc.

Creditors

The costs of administering an IVA are considerably lower than in bankruptcy, enabling a higher return to creditors.

IVA's operate as an insolvency procedure and creditors can as a consequence of this, still reclaim tax and VAT relief as a bad debt.

Disadvantages of an IVA

Where contributions from income are being made, IVA's are generally expected to be for a period longer than that in bankruptcy.

If the Debtor fails to comply with the terms of the arrangement his home and assets can still be at risk if they have not been specifically excluded from the proposals.

If the IVA fails as a consequence of the Debtor not meeting his obligations under it, it is likely that the Debtor will be made bankrupt at this time.

There will be no opportunity for a Trustee in Bankruptcy to investigate the actions of the Debtor or possibility of hidden assets.

David Callaghan is a professional debt consultant with several years of experience of advising people about debt. http://www.ivafreehelp.co.uk

Related Information
	More information on IVAs
	IVA Criteria
	Full and Final IVAs
	Full And Final Settlements

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