IVA Solicitors — A Formal, Legally Binding Alternative to Bankruptcy

Occasional missed payments can often be managed by the supervisor — a payment break or a variation to the IVA terms (requiring creditor approval) may be agreed. Where a debtor's circumstances change significantly (for example, following a redundancy), a variation proposal can be submitted to creditors. If the debtor cannot maintain payments and no variation is agreed, the supervisor may apply to court to terminate the IVA and present a bankruptcy petition — at which point the debtor has the protections available in the bankruptcy process. A solicitor advises on the options and represents the debtor at any variation meeting or termination proceedings.

Yes — if creditors holding more than 25% by value of voting creditors reject the proposal (or modify it in a way unacceptable to the debtor), the IVA is not approved. In that case, the debtor must consider the alternatives — bankruptcy, a Debt Relief Order (where qualifying), or continued informal negotiation. A solicitor advises on the chances of approval for a given proposal and on the appropriate fallback plan if the IVA is rejected.

An IVA does not automatically affect employment or professional licences, though some contracts (for example, in financial services) require disclosure and some regulated professions (FCA-regulated firms, solicitors, accountants) restrict individuals subject to IVAs from holding certain positions. Unlike bankruptcy, an IVA does not disqualify a director, and a debtor under an IVA can continue to act as a company director. A solicitor advises on the specific consequences for your profession or employment before entering an IVA.

Yes — HMRC debts (including income tax, VAT, PAYE, national insurance, and penalties) can be included in an IVA as unsecured debts. HMRC is bound by the IVA if it approves it, like any other creditor. However, HMRC is a significant creditor in many IVAs and their attitude to the proposal significantly affects the prospects of approval. A solicitor advises on the strategies for securing HMRC's support for an IVA proposal, including ensuring the tax debts are accurately quantified and any outstanding returns are filed before the proposal is circulated.

The answer depends on your specific circumstances: (i) assets — if you own a property with significant equity, an IVA may protect it better than bankruptcy (where the trustee can force a sale, subject to time limits); (ii) income — where you have significant surplus income, an IVA allows you to retain more of it over a shorter period than a 3-year income payments agreement in bankruptcy; (iii) profession — some professions disqualify bankrupts but not those subject to IVAs; (iv) cost — IVA fees (typically deducted from contributions) can be significant. A solicitor provides a comparison of the consequences of each option for your specific position before any decision is made.