New Guidance on Individual Voluntary Arrangements

1 March 2021 
2 minutes
Debt Recovery & Insolvency

The IVA Standing Committee has collaborated on new guidance regarding providing additional support to consumers in IVA’s during the Covid-19 pandemic. This support has afforded consumer’s additional support to 30 April 2021 but this could be extended. This guidance offers consumer’s additional support if they are unable to meet the obligations of their IVA. This will apply to a number of IVAs:

IVA’s already being supervised

New IVA’s drafted after 20/04/2020

These measures are in place for the purpose of providing consumers with a sustainable payment plan to meet their obligations during the Covid-19 pandemic.

IVA’s entered into because of Covid19

Financial stress as a direct result of Covid-19 can be used for the purposes of entering into an IVA but the guidance issued by the government has stated this has to be confirmed in the arrangement, so creditors are aware of this.

If any creditor opts to reject the IVA as they deem there are alternative solutions, then this is permitted.

Presently any consumer who is availing of the Government’s financial support schemes can use this as a source of income for the purposes of fulfilling their payment obligations and it is important creditor’s are aware of this if any IVA’s are accepted by them. However, the key is to ensure the IVA specifically provides additional information on how this is going to be maintained once the support schemes from the Government cease. This is of particular importance for creditor’s to be mindful that certain arrangements are based on government schemes as additional support and there needs to be clarity on how payments are maintained in the arrangement after the schemes stop paying.

This is of particular importance, for any creditor evaluating IVA’s prior to agreeing to them as it could be the case the IVA’s are manageable for people as they are obtaining additional support from the government but after this, it could mean they do not have sufficient means of upkeeping payments and as such, it is important for creditor’s to evaluate this in light of the guidance.

Existing IVA’s

These measures offer additional support to those who are unable to afford their current obligations and are permitted to easing of those obligations as follows, subject to the discretion of the supervisor:

  Reduced payments up to 50%

  Payment holiday’s up to 6 months

Such payment holidays are not ideal in any circumstance for those creditor’s feeling the pinch during Covid-19 and as such it is necessary for the supervisor to specifically grant an initial period of 3 months’ payment holiday with the view of an extension if necessary.

If you require any assistance regarding an Individual Voluntary Arrangement, please contact our specialist Debt Recovery and Insolvency team.

Contact David

David McAlinden
Director
dmca@mkblaw.co.uk
028 9099 3116

Contact Billy

Billy Muir
Solicitor
wm@mkblaw.co.uk
028 9099 3147

Contact Ruairi

Ruairi Maguire
Trainee Solicitor
rma@mkblaw.co.uk
028 9099 3145

Share Article

This article is for general guidance only and should not be regarded as a substitute for professional legal advice.

Experienced

Our experience and expertise allow our team to provide an unrivalled service to all clients.

Personal

Our personal understanding ensures our clients are at the forefront of our services.

Flexible

Our team provides clear legal guidance to complement your business structure.

Specialised

Our clients span all industries, from technology to agriculture and hospitality to renewables.

Or please call us on 028 9024 2450 or email info@mkblaw.co.uk

MKB Law Solicitors Belfast is regulated by the Law Society of Northern Ireland. Content is copyright © MKB Law 2021. Terms & Conditions apply.