Published in IVA Focus Features on Saturday, March 24 2007

The main difference between an IVA and an FTVA is a FTVA can only be proposed after a bankruptcy order has been made, this article will explain each arrangement, how you would go about doing each and offer links where you can get further advice or even to see if an Individual Voluntary Arrangement would be the best option for you to take when dealing with your debts.

Individual Voluntary Arrangement (IVA)

The IVA is seen as an alternative to bankruptcy, it would protect your assets (with restrictions) and is a formal arrangement between yourself and your unsecured creditors, the arrangement or agreement on how you would pay your debts back, in full or a percentage of your debts over a fixed term.

The IVA is applied for at court and an Insolvency Practitioner has to appointed to supervise the arrangement for duration of the IVA.

In order to see if you are eligible for an IVA you would need to get debt advice to ensure the IVA is the best option for you to settle your debts, once the advice is right and an IVA is the best option you would need to find an Insolvency Practitioner (IP) to represent you and propose your IVA to your creditors, the IP would then become the Nominee of the arrangement.

Click to get “Debt Advice”

Once the IP is willing to act as nominee, they will then go ahead and draft a proposal to your creditors outlining what you would pay back to them over the term.

If your creditors are threatening with legal action or there is urgent action needed to stop any creditors taking legal proceeding then the IP can apply to the court for an interim order, this order will give the IP enough time to draft the proposal to your creditors and hold the meeting of creditors without any legal being taken against you.

Regardless whether the IP applied for an interim order or not, the IP will tell the court about the proposal and the date when the meeting of creditors will go ahead. The meeting of creditors will determine whether the creditors will accept your proposed repayments into the IVA and that they are happy with the return that the creditors would back over the term of the IVA.

If the creditors do not agree to the terms of the IVA, it may be possible for the nominee to write modifications to proposal to fit the creditors requirements.

If the creditors agree to your offer in the proposal then the IP will notify the court and they will then supervise your IVA and manage the payments to your creditors, ensuring they receive the money in accordance with what you have proposed.

Fast Track Voluntary Arrangements (FTVA)

A FTVA is like an IVA however the Official Receiver in bankruptcy act as the nominee of the arrangement and supervisor once a bankruptcy order has been made against you.
Unlike an IVA there is no meeting of creditors held, no modification to the proposal requested by creditors is allowed.

If the Official Receiver identifies that a FTVA is a viable option and that it would provide a greater return to creditors than what bankruptcy would then the bankrupt would complete a proposal and return it to the Official Receiver.

The Official Receiver has 28 days to decide if they wish to act as the nominee in the FTVA, if the OR wishes to act as nominee then they will send the proposal to creditors for them to vote, if 75% in value accept the terms of the proposal then the FTVA is accepted.

Once the proposal is accepted the case will be passed to Regional Trustees Liaison Unit (RTLU) who are split into regions, they monitor each bankruptcy and FTVA case for trustees, they will file the report of approval to the relevant county court. The OR from RTLU becomes the supervisor of the FTVA. Once the supervisor is appointed they will make arrangements for the Bankruptcy Order to be annulled and will then administer the FTVA.

RTLU will also collect the payments through a collection agency, if payments are missed (defaulted) then the collection company will refer it back to RTLU (supervisor), the supervisor will then investigate and questions why the default payments happened.

A Fast Track Voluntary Arrangement is suitable for individuals who can afford to make repayments for the time period and have simple assets such as house or cars, they are not really designed for traders, directors or business who have company assets to take into account.

The fees for FTVA’s are:-

• Registration Fee - £15.00
• Nominee Fee - £300.00
• Supervisor Fee 15% of all monies raised.

Even if you go bankrupt, you may find yourself entering into an FTVA and not being bankrupt, it is always best to do an IVA prior to going bankrupt, the costs of a FTVA can be very high and it would always be best to get debt advice before taking any drastic action.

Get Advice