Individual Voluntary Arrangements - Managing a Crisis Situation

When outstanding debts become overwhelming, and the interest causes the debt to rise faster than you can pay it, an individual voluntary arrangement (IVA) may be the answer. An IVA is an agreement made between you and your creditors, with an insolvency practitioner acting as a supervisor. Your debts are combined, then divided into affordable monthly payments over a set period of time. Each creditor receives a share of the total upon completion of the agreement. Your monthly payment is decided according to your income. Your obligation is to make the payment each month without fail, as stated in the agreement. The IVA is designed to allow you to make your monthly payment as well as pay your regular household expenses without causing undue hardship to your family.

What happens when financial situations change over the duration of the IVA? Sometimes monthly bills increase unexpectedly, or people lose their jobs. An unexpected illness can render you unable to work, what happens to your IVA?

Part of the supervisor’s job is to monitor your level of income and expenditure for the duration of the IVA. Typically, your circumstances are reviewed every 6 or 12 months. If there is a significant change in your financial situation, such as a serious illness or loss of employment, there is a provision in the IVA to allow a further meeting of creditors to be called, to persuade the creditors to extend the period of the IVA. Under exceptional circumstances, such as a terminal illness, it may be possible to declare the IVA to be complete.

The most important thing is to communicate with your supervisors because they are there to help you. Tell them about any change in circumstances immediately so that it can be addressed without delay.