IVA Pros & Cons

Pros

  • Any calls can immediately be referred to us.
  • Because the IVA is a legally binding contract between you and your unsecured creditors’ no legal (court action, bailiff action, bankruptcy action or otherwise) action can be taken against you in respect of the debts in the arrangement.
  • Private individuals themselves or with a spouse or partner can apply for an IVA. When it is done for a couple it is said to be a ‘Joint’ IVA.
  • Persons in business as sole traders can apply for an IVA and it may be possible to continue the business.
  • Directors of limited companies can apply for an IVA.
  • Certain professionals (such as solicitors or accountants) who are barred from practising as a bankrupt can enter into an IVA with the consent of their professional body.
  • You can protect your property within an IVA (from action by unsecured creditors’) from possession proceedings being taken through bankruptcy or otherwise.
  • You can safeguard your property within an IVA from any charging order application by any unsecured creditor.
  • If your circumstances change during the lifetime of the IVA it is possible to put to your creditors’ a variation to the original agreement – such as a period of unemployment where the contributions may be waived for a period of time.
  • You should be able to operate a bank account during the lifetime of the IVA and take charge of your finances.
  • You can choose an Insolvency Practitioner and firm to deal with your case. Under a bankruptcy the Official Receiver will be your Trustee or the creditors’ may appoint one of their choice. You have no say in the matter.
  • There is less stigma to an IVA than bankruptcy.
  • There is no advertising of an IVA or other publicity (other than the IVA register).
  • Certain assets can be excluded from the IVA – in practice this mostly relates to business assets but can include your home.
  • Creditors’ will be bound by the IVA even if they voted against it – assuming the creditor/s have less than 25% voting rights.

Cons

  • If you fail to comply with the terms of your agreement the Supervisor may have to bring the arrangement to an early conclusion. This would mean that creditor rights would be restored and legal action could be commenced against you.
  • You are only allowed to borrow during the term of the IVA with the approval of the Supervisor.
  • If you own a property and there is equity within the property it will usually be necessary for you to agree to endeavor to raise further monies by way of remortgage after year 4 of your arrangement. In the event that you are unable to raise further monies it is normally agreeable to the creditors’ that the arrangement continues for one further year at the agreed level of contribution by way of alternative.
  • If your total unsecured debt is less than £15,000, an IVA is probably unsuitable.
  • It is necessary to get the agreement of at least 75% of creditors’ voting at the creditors’ meeting. In practice, a well drafted proposal will be acceptable to the creditors’.