IVA – The disadvantages of individual voluntary arrangements

If you are considering entering into an individual voluntary arrangement (IVA), then you should weigh up the pros and cons of the process first, to decide whether or not an individual voluntary arrangement is right for you or your business.

There are a number of disadvantages to applying for an individual voluntary arrangement.

• If you do not follow the individual voluntary arrangement, the arrangement will fail and your creditors are free to take further action, such as court action, against you.
• Creditors cannot petition for an individual voluntary arrangement, which means the decision is left up to you – and people often wait until the situation has deteriorated beyond a point where an individual voluntary arrangement can help before they apply for one.
• It must offer a higher return to credit ors than could otherwise be expected from bankruptcy or the creditors might not agree to it.
• Income contributions to individual voluntary arrangements usually last longer than in bankruptcy – usually five years instead of three years.
• You can’t have a new individual voluntary agreement if you have applied for one in the last 12 months.
• Although there are no restrictions regarding personal credit, it can prove difficult to obtain.

There are some advantages for your creditors too.

• There is no opportunity for an Insolvency Practitioner to investigate the possibility of hidden assets, as there is in bankruptcy.
• They might have to wait longer than in bankruptcy to be paid the funds they are owed.

It is really important that you also look into the advantages of individual voluntary arrangements before making the decision to apply for one.

More information

• IVA – What is an individual voluntary arrangement?
• IVA – The individual voluntary arrangement process
• IVA – Who needs an individual voluntary arrangement?
• IVA – When to apply for an individual voluntary arrangement
• IVA – How to apply for an individual voluntary arrangement
• IVA – The advantages of individual voluntary arrangements
• IVA – Insolvency and individual voluntary arrangements