There are many alternatives to bankruptcy available. To discuss them all in details please call 0800 074 6918 or complete the form on the left hand side of the page and one of the advice team will call you at a pre-booked time.

A Debt Management Plan

A Consolidation loan

Individual voluntary arrangements

This is a formal version of the arrangement described at (a). An individual voluntary arrangement begins with a formal proposal to your creditors to pay part or all of your debts. You need to apply to the court and you must be helped by an insolvency practitioner. Any agreement reached with your creditors will be binding on them. How does it work? 

 First, find an authorised insolvency practitioner prepared to act for you. (Your local court can give the names of local practitioners.) A list is also available for you to look at in your local Official Receiver’s office.

Then you apply to the court for an "interim order". This prevents your creditors from presenting, or proceeding with, a bankruptcy petition against you while the interim order is in force. It also prevents them from taking other action against you during the same period without the permission of the court

The insolvency practitioner tells the court the details of your proposal and whether in his or her opinion a meeting of creditors should be called to consider it.

If a meeting is to be held, the date of the meeting and details of the proposals are sent to your creditors. Only those creditors who had notice of the meeting are bound by the arrangement, so it is important that you have accurate records of all your creditors’ names and addresses. Otherwise, the arrangement might fail because the practitioner cannot contact all the creditors and, therefore, bind them to it

At the meeting, the creditors vote on whether to accept your proposals. If enough creditors (over 75% in value of the creditors present inperson or by proxy, and voting on the resolution) vote in favour, the proposals are accepted. They are then binding on all creditors who had notice of, and were entitled to vote at, the meetin

The insolvency practitioner supervises the arrangement and pays the creditors in accordance with the accepted proposal.

What will an individual voluntary arrangement cost?

The cost of an IVA will be incorporated into the IVA monthly payments made. The monthly amount paid into the IVA will cover the payments to your creditors as well as the cost and fees for carrying out the IVA. Please note that if the IVA fails at creditors meeting or you change your mind we you will not have to pay any cost or fees for this work whatsoever.

When can you make an individual voluntary arrangement?

It is better and cheaper for you to set up an individual voluntary arrangement before you become bankrupt but you can propose one afterwards.

Are there any restrictions?

Generally speaking no, but the court cannot make an interim order if you have applied for one in the previous 12 months. There is no maximum or minimum level of debt and no maximum or minimum level of repayments, except what is acceptable to your creditors. An arrangement might particularly suit you if:

·         you have friends or relatives prepared to help pay or contribute towards paying your debts;

·         your income enables you to pay regular sums to creditors.

What are the advantages of an individual voluntary arrangement compared to going bankrupt?

·         It gives you more say in how your assets are dealt with and how payments are made to creditors. You may be able to persuade your creditors to allow you to retain certain assets (such as your home). You will obviously have to act responsibly and flexibly in order to reach agreement with your creditors.

·         You avoid the restrictions which apply to a bankrupt (see section 10).

·         Because you will not have to pay some of the fees and expenses which are charged in a bankruptcy, the overall costs are likely to be less.

Can an individual voluntary arrangement be proposed by a member of a partnership?

Yes. You can propose an individual voluntary arrangement on your own which must take into account the claims that the creditors of the partnership have against you personally. It will not affect the rights of the partnership creditors to take action against the partnership itself or against any other partner.

Alternatively, you and your partner(s) may wish to propose an arrangement involving the partnership creditors and the personal creditors of the partners. This can be done in two ways:

·         the partners may propose interlocking voluntary arrangements, with each partner making proposals for their own debts and the debts of the partnership

·         the partnership may propose a partnership voluntary arrangement (usually accompanied by voluntary arrangements for each partner).

An authorised insolvency practitioner must help you to make proposals to creditors. He or she will be able to advise you which procedure to follow.

Warning: If you enter a voluntary arrangement but fail to give full details of your assets and debts or fail to do what you have agreed under the arrangement, then the insolvency practitioner, or any creditor bound by it, may still petition for your bankruptcy

If you would like to speak to a debt adviser, free of charge about how you might be able to avoid bankruptcy then please click the link below and complete the contact form on the left hand side of the page. To contact an advisor call 0800 074 6918