Individual Voluntary Arrangement (IVA) is one of the suitable options that you can use to pay off your debts and avoid being bankrupt. Insolvency Act 1986 (Part- VIII) established this alternative. IVA provides repayment proposal to the debtors. Insolvency Practitioners work as a medium between the debtors and the creditors. They may negotiate with creditors in order to rescue the business, or they may take over full control of the company not letting it collapse down. The court approves the binding agreement, so there is a smaller number of unsecured risks. There is a proposed time span, and the insolvency practitioner deals with your credits and creditors during the on-going valid time. They are flexible enough to fulfill your needs. However, the IVA can be costly as they demand a fee apart from the fees of the insolvency practitioner.

A Legal Procedure:

IVA ensures the prevention of bankruptcy. This legal agreement may be applied into before or after the bankruptcy order had been arranged. It is applied when the debtor drafts a formal proposal to the creditors to pay part or all of the debts. According to the amendment of Insolvency Rules 1986 in 2010, the debtor may request the creditors to postpone the debts for a certain period of time. Also, the debtor can appeal to the court for an interim order in case of delays in the IVA procedure. Insolvency practitioner considers the proposal and makes a report to the debtor’s creditors or to the court about the acceptance of the proposal. Of acceptable, the nominee (insolvency practitioner) will put the proposal to a meeting of the creditors. The supervising of the IVA and overseeing its operation depends on the acceptance, and the viability of the proposal decided at the meeting. An agreement reached thereafter with the creditors will be a formal binding.

The debtor prepares the proposal for the expected IVA and the nominee's report on the proposal. The debtor may take help from an insolvency practitioner regarding the technical matters involved in making such a proposal. Therefore, the proposals are professionally drawn up. The nominee plays an important role here. If a bankrupt has not consulted an insolvency practitioner and has not availed the benefits of an Individual Voluntary Arrangement before the bankruptcy, there is still a chance for the person to save himself. There have to be some assets or at least a potential for an IVA to be proposed, and if there is so, the examiner should draw the attention of the bankrupt to the provisions of the voluntary arrangement. And if everything fits, a list of insolvency practitioners may be handed over to the person to discuss the matter with whom he/she chooses from the list.

• Benefits of IVA:

There are several benefits of Individual Voluntary Arrangement. It gives way to flexibility to the debtors with creditors. The procedure is very much scientific in the way it chooses the assets. It includes the assets that are normally unavailable in bankruptcy or say it arranges for the funds from a third party or from the monthly income of the debtor. It gives the debtor more options to handle with his loans and judicially use his own money or assets. The debtor's assets are dealt with more insight and depending on so the creditors may exclude some of the debtor's assets. These excluded assets, remaining under possessions of the debtor, him/herself, allow him/her to avoid bankruptcy.

The Proposal:

The proposal plays probably the most important role in the Individual Voluntary Arrangement. It is the leading document in any voluntary arrangement. It should have the explanation of why the debtor thinks that the voluntary arrangement can be used through. It must detail the liabilities and most importantly the assets of the debtor, and also the proposal should contain the valid reasons for why the creditors may keep their patience for a certain extended period of time and whether they will gain with the voluntary arrangement. As a must, the proposal provides the name of an insolvency practitioner or any other legally authorized person who is going to oversee the implementation of the arrangement. The proposal should clarify the debtor's accountability regarding the time and amount of the contributions in order to avoid any misunderstanding whether he/she has agreed to the terms and conditions of the voluntary arrangement.

Role of Insolvency Practitioner:

An insolvency practitioner or a nominee handles the intricate matter in an effective way. His/her role is a responsible one. He/she must be a professional independent in order to produce his judgment while preparing the report. Otherwise, he/she can be liable for any of the proceeding costs if the IVA gets a clear acceptance. Among the duties of the nominee, the most important task is to prepare the report. Arranging the meeting with creditors, making the proposal worthy of acceptance, communicating the result of the meeting is the other tasks.

So, yes, you can save yourself from bankruptcy. Just you need to make sure you can overcome the current situation and earn enough to pay IVA after the proposed time limit. IVA is one effective way to save you in this penniless situation.