Why choose an IVA?

  • An Individual Voluntary Arrangement (IVA) is essentially a contract between you and your
    unsecured creditors.
  • It is an alternative to bankruptcy which offers greater flexibility and does not impose of the restrictions that come with bankruptcy. It is the ideal solution for anyone whose debts have become unmanageable but who has a regular income and/or an asset to realise in order to pay creditors more than they would get in a bankruptcy.
  • You are offering to make a commitment to your creditors often over a period of (usually) 5 years to provide them with a better outcome i.e. a greater dividend than they would receive if you were to be made bankrupt.
  • Your offer to the creditors is put in the form of a formal proposal which is prepared with the assistance of and monitored by an Insolvency Practitioner (IP). Careful consideration should be given to whether it is realistic i.e. you do not promise anything you cannot reasonably commit to.
  • An IVA offers you protection from your creditors. In an IVA all of your unsecured creditors will be bound by the terms of your proposal. Creditors will not be able to pursue you and no further interest will be added to creditors debts. Under the terms of an IVA you will be obliged to sell assets and/or make a regular contribution into a ‘pot’ for a number of years – for distribution to your creditors.
  • However an IVA proposal must be approved by a 75% majority of your creditors.
  • If you are unsure of any aspect of the IVA process please call 01782 201120 or email contactus@moorestoke.co.uk

Procedure Overview

  • Your chosen IP will assist you in putting your proposal together. At this stage the IP is known
    as your ‘nominee’. If the creditors accept your proposal, he will become your ‘supervisor’.
  • The IVA proposal is your document, but the IP will normally assist you in its preparation. The proposal document must contain the following;
    • Your background and financial history
    • Why you have become insolvent
  • A comparison of the expected outcome for creditors i.e. what dividend could  creditors receive in an IVA compared to what they would receive if you were to be made bankrupt.
  • What you offer to creditors in terms of a ‘pence in the pound’ settlement of their debts will depend on your own circumstances and your ability to pay.
  • The terms of your proposal are based entirely on your own circumstances. The main proviso is that whatever you propose, however many pence in the pound, must be better than bankruptcy.
  • If you are offering to pay a monthly sum into a ‘pot’ for the benefit of your creditors it is customary for such arrangements to last no longer than 5 years i.e. 60 months.
  • The IP will then make an assessment of your proposal and put it to your creditors provided he thinks that is acceptable.
  • In order for your IVA to proceed it must be approved by 75% majority of your unsecured creditors.
  • If creditors approve your IVA proposal, then your nominee becomes your supervisor. It is his responsibility that you comply with the terms of your proposal.


Q. Will I lose my home?
A. Dependent on the terms of the IVA it may be that sufficient funds can be raised from
monthly contributions to pay all creditors in full. However if they cannot, it is likely that
funds will need to be raised from your property to pay into the IVA.

If there is more than £5,000 equity within your property it is usual that within the last year
of the IVA 85% of the equity available is paid into the IVA by way of a re-mortgage.
If you can’t re-mortgage, you’ll continue to pay the usual monthly contributions under the
IVA for a further twelve months instead.

Q. How will it impact my credit record?
A. The IVA will be registered on your credit file and will remain for 6 years after the IVA
has started.

Q. How long will it last?
A. Each IVA is different however the standard length is 5 years.

Q. Who will know?
A. When approved, your IVA will be listed on the government’s publicly available IVA
register. Whilst the details of your proposal remain confidential between you and your
creditors, the fact that you are in an IVA will be a matter of public record.

Q. What happens if I miss a payment?
A. The IVA proposal will detail how many missed payments equates to a default of the
arrangement. If you do not remedy the default and/or fail to comply with the terms of your
IVA proposal your IVA will be deemed to have failed and your Supervisor will terminate the
IVA. He may be obliged to petition for your bankruptcy. If not, the IVA having failed and
been terminated you will once again be pursued by your creditors.

Q. Can I continue to trade?
A. Yes – an IVA does not have the same restrictions as bankruptcy so you can continue to
trade and can act as a Company Director. However, you must pay all post IVA debts to avoid
further debt problems arising.

Q. Can I have a bank account?
A. Yes – however any overdrawn accounts will be closed as they will be a debt in the IVA,
and the bank may restrict what type of account you can hold.

Q. What happens once my IVA ends?
A. If your IVA is completed successfully you will receive from your Supervisor a Certificate of
Completion. Creditors will receive notification that their debts have been satisfied. Any
remaining element of the debt not repaid will be written off.