An Individual Voluntary Arrangement (IVA) is a debt solution which involves yourself and your creditors coming to a legally binding agreement to extend your loan term and allow you to make reduced monthly repayments over this new timeframe.
Whilst an IVA can provide you with a flexible option to address your debt and alleviate the financial strain of debt in the short term, they nevertheless come with a number of dangers which could cause a long-term substantiation of your problems.
The following page will outline the measures you set up an Individual Voluntary Arrangement and it begins to fail. This will typically occur it is no longer financially attainable for you to pay your monthly contributions into your IVA.
I’m struggling to make my payments, what should I do?
If your financial condition worsens whilst you are on an IVA, then it is imperative that you let your insolvency practitioner know immediately so that you are not put at risk of your agreement collapsing. They might be able to negotiate with your creditors and make alterations to your IVA so that you pay a lower amount each month, until that time that your situation picks up.
I don’t have enough to make any payments at all, what should I do?
If you are currently unable to afford your monthly IVA contributions, and your creditor’s do not consent to temporarily lowering your payments until that time that your situation picks up, then your IVA will be terminated.
If this happens, then you’ll still owe money to all the creditors included within your IVA, and they will be legally cleared to pursue court action against you if they desire. If there is a sufficient amount of money in your IVA fund, then your insolvency practitioner might decide to open bankruptcy proceedings against you, though your creditors will still be entitled to do the same individually.
If your IVA fails, then you’ll still be required to pay your insolvency practitioner fees for the service they have done on your behalf up until that point.
Being made bankrupt
In the event that your IVA collapses, your presiding insolvency practitioner might make a request to the court to open bankruptcy proceedings against you. If you are someone with a relatively low annual salary and number of assets, then taking this option might be the best route for you from this point. However, you should consider that there are a number of dangers that come along with bankruptcy and you will need to be fully aware of the potential ramifications of using this procedure before making a final decision about pursuing it.
Your creditors might also attempt to have you declared bankrupt if your IVA fails. Usually, they would have to provide you with an official caution before undertaking this type of action, called a statutory demand, though this would not be necessary in cases such as these because they are pursuing your bankruptcy due to your IVA being terminated. They can make a direct request to the court straight away to have your declared bankrupt on the premise that you failed to uphold the terms of your IVA.
If your IVA has failed and you are keen to prevent bankruptcy proceedings taken against you, then you should directly contact your lenders immediately and attempt to negotiate a new repayment arrangement with them individually.
Consider other debt solutions
If your IVA fails, then you could consider a number of other debt solutions, such as a debt management plan, debt consolidation or bankruptcy, to address your financial issues. The reasons behind your IVA’s failure could have been that it wasn’t well suited to your situation and you might find that another debt solution would be more effective and relevant to your unique circumstances.
