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Freephone
0800 915 4604
www.adviceni.net/business-debtservice
INDIVIDUAL VOLUNTARY ARRANGEMENTS
Can I have a joint IVA?
If you and your domesc partner meet the
IVA criteria by taking into account both of
your circumstances you can also propose an
IVA together. This is known as an
“interlocking” IVA.
Contact us for further advice.
FACTSHEET 1 (April 2021)
What is an individual voluntary arrangement (IVA)?
An individual voluntary arrangement (IVA) is a legally binding agreement between you and your creditors.
This agreement allows you to repay what you can aord towards your debts, with the remainder wrien
o by your creditors when the arrangement is completed.
An IVA can be set up in a number of dierent ways. It can either be a monthly instalment plan based on
your surplus income over a xed term (normally ve years), or if it is deemed you do not have a monthly
surplus income to oer your creditors you can propose a short term arrangement if you have an asset that
can be sold or a third party has a lump sum to oer your creditors. An IVA can also be a mixture of both
instalments and a lump sum.
An IVA can be a very eecve way to deal with your debts. However, there are both advantages and disad-
vantages of IVAs. These are discussed later in this fact sheet. If you have any queries, please phone us for
advice before deciding whether to go ahead with an IVA.
Is an IVA suitable for me?
An IVA could help you to deal with your debts if you
are:
a sole trader or partnership and have business
or personal creditors, or both;
if you are the director of a limited company and
have personal debts that you cannot aord to
pay in full.
An IVA cannot be used to deal with the debts of a
limited company. Contact us for advice about the
opons available to a limited company to deal with
its debts.
Is an IVA a realisc opon for my debts?
For an IVA to be a realisc opon, you would normally need to have:
at least two debts to two dierent unsecured creditors totalling £10,000 or more
and
be able to pay back at least 10p for every £1 of debt you owe your creditors.
www.adviceni.net/business-debtservice
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INDIVIDUAL VOLUNTARY ARRANGEMENTS
Do I have to include
everything in an IVA?
You have to include all creditors and
assets in your IVA proposal
regardless of how they are going to
be treated in the IVA. This includes
secured creditors such as mortgage
lenders. If you do not give complete
informaon in an IVA about your
assets and debts you could be
comming a criminal oence.
Contact us for further advice.
These criteria are a guide only. You may sll be able to consider an IVA even if your circumstances fall out-
side of these guidelines. You can also propose an IVA even if you have been made bankrupt.
Is an IVA suitable if I am in a business partnership?
If you are in a business partnership, an IVA may sll be an opon but it must take into account your person-
al liability for the debts the partnership owes. These creditors could sll take acon against the partnership
itself or against other partners.
If you and your business partners have personal debts, as well as debts owed by the partnership, you could
propose an arrangement to deal with all debts at the same me. Contact us for further advice.
What debts can be included in an IVA?
You can include most types of debt in your IVA proposal including priority debts such as business rate
arrears, tax debts, fuel debts and trade supplier debts. However, you cannot include:
maintenance, or arrears of maintenance, ordered by a court;
child support agency arrears;
magistrates’ court nes;
mortgage, secured loan or rent arrears on your current home or business premises unless your
landlord agrees (which is unlikely); and
student loans
If you are unsure if a debt can be included in an IVA and would like claricaon, contact us for advice.
www.adviceni.net/business-debtservice
What if I have a hire
purchase agreement?
You have to be very careful if you
have a hire purchase or lease
agreement. You need to have or
obtain a copy of the agreement you
have signed to check there is not a
clause which could allow the creditor
to end the agreement if you enter
into an IVA. If you have a hire
purchase agreement and are unsure
contact us for further advice.
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INDIVIDUAL VOLUNTARY ARRANGEMENTS
What is the procedure for an IVA?
An IVA has to be set up by an Insolvency
Praconer (IP). An IP is usually an accountant or
solicitor who is authorised to set up IVAs.
Once an IP has agreed to make an IVA proposal for
you, if you wish they can apply to the High Court of
Jusce in Northern Ireland for an ’interim order’.
An interim order stops your creditors from starng
or connuing bankruptcy proceedings against you.
It also stops any other enforcement acon whilst
the interim order is in place. If you wish to obtain
an interim order you must pay the costs involved
upfront and these are non-refundable even if your
IVA is accepted.
What is the Process for an IVA?
The IVA process is as follows:
You provide all the necessary informaon and documentaon to your IP to allow them to prepare the
proposal on your behalf. You agree the content of the proposal with your IP and the oer proposed
to your creditors and sign o the agreed document.
The IP forwards your IVA proposal to all your creditors and arranges a formal meeng called a
‘creditors meeng’.
At the meeng your creditors have to vote on whether to accept the IVA oer proposed. Usually
creditors send their vote to the IP by post / fax / email & don’t actually aend the meeng.
The IVA proposal has to be accepted by 75% ‘by value’ of the creditors that submit votes for it to
become legally binding on all creditors. ‘By value’ means vong creditors by the total amount of debt
owed to them, not by the number of creditors. This means that if the creditors to whom you owe the
highest amount of debt vote against the proposal, the
IVA may not be accepted. If a creditor does not sub-
mit a vote, then they will have to accept the out-
come of those creditors who did submit votes.
Creditors can approve your IVA but also submit
modicaons to the terms of the IVA and ask you
to contribute more, pay for longer, or include as-
sets that you have originally excluded from the IVA.
However, you need to agree to accept these
modicaons, and the IVA is not approved unl
you do so.
If the IVA is approved your IP will supervise the
arrangement and make sure you full the
obligaons you have agreed to in the IVA.
If the IVA is rejected, you return to the same
posion as you were before you applied for an IVA.
www.adviceni.net/business-debtservice
Do I have to obtain
an interim order?
You can put forward an IVA without
applying for an interim order but
your creditors can sll take enforce-
ment acon against you unl the IVA
is agreed. You can only have one
interim order in a 12 month period.
Contact us for further advice.
What if I owe
money to HMRC?
You can put sll apply for an IVA to
clear your HMRC debts. However,
HMRC have criteria that must be
sased for them to accept an IVA.
If HMRC have a signicant share of
the debt owed then contact us for
further advice.
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INDIVIDUAL VOLUNTARY ARRANGEMENTS
What about my home?
If you are a home owner, your IP will normally
include an ‘equity clause’ in your IVA proposal. This
means that during your IVA (normally around month
54) if there is equity in your property you would be
expected to aempt to obtain a secured loan or re-
mortgage to release your share of these funds.
If you are able to re-mortgage or obtain a secured
loan then the repayments will also have to be
aordable. You should also be le with equity of at
least 15% of the value of your share in the property.
If you are unable to obtain a re-mortgage or secured
loan, and there is equity in your property then you
usually must make an addional 12 monthly
repayments in lieu of your share of equity. There
are specic guidelines at dealing with the property in
which you live, in order to assess your own situaon
please contact us for further advice.
What are my next steps if I want to propose a self-employed IVA?
Business Debt Service can refer you to an IP and do a lot of the inial work and advice so you are fully
aware of what to expect and the IVA process. Any IP we refer you to:
Will not charge any fees and you will not be asked to make any monthly payments or forward any
lump sum payments unl the IVA proposal gas been agreed by your creditors
You will be able to sll take independent advice from Business Debt Service whenever you need to
Your IP should keep you fully informed about your IVA and make sure you fully understand any
changes or modicaons to your IVA and what they will mean for you.
Do I have to use an IP recommended by Business Debt Service?
No, you do not have to use one of the IP’s that we can refer you to. If you prefer we can give you advice on
how to nd one yourself.
What will I be charged for an IVA?
All IP’s will charge fees for seng up and supervising an IVA. The level of the fees the IP can charge will be
agreed by the creditors at the creditors meeng, and the fees will be taken from the funds you have
proposed to pay into your IVA. Any IP we refer you to will never charge you any fees if your IVA is rejected.
If your IVA is approved, we may receive a referral fee from the IP. This is from the work we have carried out
to get the IVA approved and any payments we receive supports our ongoing work of giving free help and
advice to people with debt and nancial problems.
www.adviceni.net/business-debtservice
Are you named on a
property other than
the home you live in?
The rules described for the home
you live in does not apply to buy-to-
lets or other property you may have
an interest in. This area can be very
complicated.
Contact us for further advice.
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INDIVIDUAL VOLUNTARY ARRANGEMENTS
What if my circumstances change aer the
IVA is agreed?
If your circumstances change, you must tell your IP. If
you are unable to keep up with your payments, your IP
can ask the creditors to accept lower payments and
agree a ‘modied’ IVA. If you cannot make any
payments, or your creditors refuse to accept lower
payments, your IVA may fail.
If this happens, your IP may have to peon for your
bankruptcy, but this will not happen in all cases. Your
creditors can then also take acon against you and
make you bankrupt, so it is very important to
immediately contact and agree payment arrangements
with each of your creditors separately to stop this
happening.
www.adviceni.net/business-debtservice
Can my IP change the
amount I pay into my
IVA?
If your circumstances change, your IP
can usually allow small changes to
the amounts you pay. You may also
be able to get a payment break, how-
ever ulmately your creditors decide
this.
What are the advantages of an IVA?
You will not pay any upfront fees if
you use an Insolvency Praconer
from the Business Debt Service
panel.
You can normally connue to trade.
Repayments are made for an agreed
period and based on what you can
aord. You usually only repay a
percentage of your total debt.
The remainder of your unsecured
debt is wrien o upon the success-
ful compleon of your IVA.
Interest and charges will be frozen.
You can connue with secured
nance agreements (subject to the
agreements terms).
You will not automacally lose your
house or any other assets, and you
must approve any modicaons
your creditors propose to the oer
you put forward in your IVA. You will
not have the same restricons on
you as you would if you went
bankrupt.
What are the disadvantages of an IVA?
The income you draw from your
business may vary throughout the
year. This can make it dicult to
keep to the payments under the IVA.
You must declare all assets and
liabilies in your IVA. You cannot
leave out any creditors as they must
all be treated equally.
If you do not keep to the terms of
the IVA then the creditors can take
acon against you if the IVA fails.
If you can no longer aord the
payments, your IVA may end if the IP
cannot persuade your creditors to
accept a variaon of your IVA.
If the IVA is accepted it is recorded
on your credit le for six years or
unl it completes whichever is
longer.
You are usually unable to obtain
further credit while in an IVA.
You may have to change bank
accounts depending on your
circumstances.
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INDIVIDUAL VOLUNTARY ARRANGEMENTS
What if I am Bankrupt and want an IVA?
If you have been made bankrupt an IVA is a potenal op-
on to get your bankruptcy annulled. Usually the Ocial
Receiver will make you aware of the IVA being an opon
when you aend their oces for your bankruptcy
interview.
Pung an IVA proposal to the ocial receiver aer you
are made bankrupt is called a ’Fast Track’ voluntary
arrangement. The ocial receiver should agree to act as supervisor of the fast track voluntary arrange-
ment if they feel it will produce a beer return for your creditors than they would receive through bank-
ruptcy. Unlike an IVA there is no formal creditors meeng and the fast track arrangement proposal can-
not be modied. Also, there are set fees for this process.
However, it is not always possible to make a fast track voluntary arrangement proposal to annual a
bankruptcy and it will be based on your personal circumstances please contact us for further advice.
Where will details be kept about my IVA?
Public Register
Records of IVAs and fast track voluntary arrangements are kept on a public register called the NI Individual
Insolvency Register. You can search this for free. Go to:
hps://www.online.economy-ni.gov.uk/IVA_Register/IVASearch.aspx
Alternavely, you can search the register by vising the Insolvency Service at Fermanagh House, Ormeau
Avenue, Belfast, BT2 8NJ. Your IVA or fast track voluntary arrangement will remain on the register unl it is
completed or terminated.
Credit reference agency les
Records of IVAs are normally held on credit reference agency les for six years from the date the IVA
began. This can make it dicult for you to connue trading in business if you rely on using credit facilies.
If the IVA lasts longer than six years, the IVA will remain on your credit le unl the date the IVA ends. The
IVA is marked ’complete’ by the credit reference agency when they are informed of this by the Insolvency
Service. We would also recommend you send a copy of the leer from your IP when the IVA completes to
the three credit reference agencies (Experian, Equifax and Callcredit) so that your credit le is updated.
What other opons are there?
There may be alternave opons for you to deal with your debts, for example a debt-management plan
(DMP). This is an informal arrangement where you pay your surplus income to a debt-management
company who then negoate reduced repayments with your creditors. Bankruptcy could also be suitable,
which is a court order which ends liability for most debts. However, it involves your assets being sold to
raise money to pay to your creditors and may make it dicult for you to connue being self-employed.
Each opon has advantages and disadvantages so it is important to consider carefully before deciding
which opon is best for you. Please do not hesitate to contact us for further advice.
All informaon contained in this factsheet is copyright of Advice NI - April 2021. It may not be
reproduced without express permission of the copyright holders. Advice NI is a registered charity in Northern Ireland
number NIC100008. Whilst we endeavour to keep our factsheets up to date, Advice NI cannot be held responsible for
changes in legislaon or developments in case law since this edion of the factsheet was issued.
Please see our
Bankruptcy factsheet
for further informaon on fast
track voluntary
arrangements.
