Posts Tagged ‘debt collection’

Individual Voluntary Arrangement As Bankruptcy Alternative

Individual voluntary arrangement is used as a bankruptcy alternative in many countries all over the world, including the United States of America. This provision is also commonly referred to as IVA. As per the US bankruptcy laws, a debtor may be allowed to re-arrange the repayment schedule with their creditors. The new arrangement must be done in a way that should clear away the debts within a maximum period of five years. In most cases, the debtors are not able to make the payments in full. The creditors are encouraged by the laws to consider writing off a certain portion of debt themselves so that the debtor could easily make the repayment as per the new schedule. In the last few years, the number of people who have used IVA provisions to avoid bankruptcy has significantly improved.

How Does It Work?

If you are considering using IVA as a , you will have to apply for it to the court. The court may appoint an insolvency practitioner to help you with the process. When a final agreement is reached with your creditors, it will become a legal obligation on you to make the repayment as per the new schedule in a timely manner. At the same time, it will also become legally mandatory for your creditors to accept the payments as per the agreement once they sign it.

Interim Order

As long as this interim order is in force, your creditors will not be able to proceed or present with a bankruptcy petition against you. They cannot even harass you for during this period while you are working on a bankruptcy alternative. Whatever action they are planning to take against you, they will first need to take permission from the court.

How Much Does An IVA Cost?

The only cost involved in the process of Individual voluntary arrangement is the fee that you pay to the insolvency practitioner appointed by the court. The court may provide you a list of the practitioners and ask you to choose the one out of them. So, you are recommended to do a thorough review before you sign up with one. These professionals are usually government-approved accountants or solicitors. Their fee is generally similar to what other members in these professions charge.


The laws have also imposed certain restrictions on when you cannot use Individual voluntary arrangement as bankruptcy alternative. In general, if you have already applied for it within the last twelve months, you will not be able to use this option. However, there are no legal restrictions on the minimum or maximum levels of repayments or minimum or maximum level of debts. You can reach any agreement as long as it is acceptable to your creditors.

The best Individual voluntary arrangement for you is obviously the one that allows you to pay a regular sum of money to the lenders without much financial trouble. If you do not have sufficient amount of regular income, you must have at least some friends and family members (to help you financially) for this bankruptcy alternative to work.

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