IVA Proposal

An Individual Voluntary Arrangement (IVA) may be one of the most attractive ways to regain your financial freedom. Throughout researching an IVA, you will often encounter the term IVA proposal.

This article will look through what an IVA proposal is, the relevance of an IVA proposal to the IVA application, and how the team over at your Insolvency Practitioners Association can help you.

What is an IVA Proposal?

An Individual Voluntary Agreement (IVA) is a formal, legally enforceable arrangement between you and your creditors to repay your obligations over time. An IVA is often the preferred debt solution of many people. The proposal is at the heart of the IVA process from beginning to end, and the IVA supervisor or the insolvency practitioner can refer to it at any time to ensure that all parties are following the IVA’s provisions.

The proposal is at the heart of the IVA process from beginning to end, and the IVA supervisor can refer to it at any time to ensure that all parties are following the IVA’s provisions.

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IVAs have become a popular way to deal with their unsecured debt problems since they were first introduced into legislation in 1986 as part of the Insolvency Act.

An IVA is a legal structure that allows you to repay your creditors based on your capacity to pay rather than your previous contractual obligations. You agree to pay your creditors as much as you can afford over the course of the IVA, but no more, in exchange for them agreeing to accept your payments rather than forcing you into bankruptcy and promising to legally ‘write-off’ any money owed at the end of the IVA term if you complete it.

What is included in an IVA Proposal?

The proposal includes a thorough examination of the applicant’s personal and financial situations, which is presented for creditors to examine. The IVA proposal usually has seven parts: the Introduction; the Background of the IVA Proposal; Assets; IVA Proposal Outline; the Creditors Details; all of the legal obligations of the applicant; and a section that discloses all of the necessary information.


This part gives an overview of the proposal, including the reason for applying for the IVA, the applicant’s name, and the applicant’s address.

Background of the IVA Proposal

This part discusses the applicant’s age, family, marital status, dependents, and a brief history of their financial circumstances.


The background discusses the details about the applicant’s accommodations, any property they own, any vehicles they own, their income, and the estimated values of other existing assets and equity.

IVA Proposal Outline

The proposal outline is the longest part of the IVA proposal. This part includes more in-depth details about the proposal.

  • The proposed proposal length
  • Estimated values to be paid
  • Details of the charges to be credited to the IVA contributions, along with the standard procedure in case of arrears
  • Anticipated income
  • A detailed outline of the annual review process and steps to follow if the applicant earns additional income
  • Payment break details
  • List of total liabilities
  • The steps to follow in the event of redundancy
  • Information about the windfall clause along with the after-acquired asset details

Creditor Details

In this section, the Insolvency Practitioner will list all of the creditors owed by the applicant. It details how much each creditor is owed and their rights as creditors to receive payments from the IVA.

Legal Obligations of the Applicant

The applicant and the insolvency practitioner, also called the nominee, helping them prepare the proposal will include the legal terms and conditions that bind the applicant, such as the use of credit during the IVA, any possible change of address the defence of legal proceedings.

Required Legal Information

The last section outlines any change in the standard terms and conditions of the IVA. It also shows the EC Regulations on the insolvency proceedings. It also shows the list of associated creditors and guaranteed debts along with transaction detail at an undervalue, preferences, and extortionate credit transactions.

The Required Legal Information section also includes the Insolvency Practitioner’s fee and the referrer payments. This should also include the disbursement details and details about the applicant.

What are the qualifying criteria for an IVA?

If you wish to apply for an IVA, the common requirements are

  • should have at least £80 in extra cash each month to pay off your debts;
  • to owe at least two separate types of debt; and
  • Over the course of the IVA, you must be able to return at least 5p in every £1 to your creditors.

However, even if you pass these requirements, you will not automatically be granted an IVA. The criteria are simply intended to serve as a guide.

Who prepares an IVA Proposal?

The IVA drafter prepares the proposal. They are a very important part of the Insolvency Practitioners team.

It is part of the drafter’s responsibility to ensure that the proposal includes all important facts of the applicant’s financial situation and a description of the IVA offer. The Insolvency Practitioner is expected to provide more input with the more complicated or uncommon the situation is.

The Insolvency Practitioner must strike a balance between your and your creditors’ interests. Only high-quality IVA ideas with a good chance of acceptance should be presented.

How likely is an IVA to be accepted?

The plan is adopted and becomes legally binding immediately if at least 75% of creditors vote in favour by the value of debt owed. Even if they voted against it or did not vote, all creditors must adhere to the IVA plan. The court is then informed of the outcome.

For the plan to be adopted, not all creditors must agree. If more than 75%, by the value of debt owed, of the creditors who vote or are represented at the meeting vote in favour, the plan is adopted. This is known as the ‘necessary majority.’ It is dependent on the amount outstanding in debt. For instance, if one creditor owes 20% of the entire debt, their vote counts for 20% of the overall vote.

Why would a creditor refuse an IVA?

As we have mentioned, even if an applicant has passed all of the requirements, there is still no guarantee that the creditors will approve the IVA proposal during the creditors meeting. Here are some of the common potential reasons for a creditor to refuse an IVA.

Unacceptable previous behaviour

If the creditors know of your previous living conditions and lifestyle, the creditor may determine that the IVA is likely to fail in monitoring. A creditor could investigate how the debts came to be in the first place.

If you lived a lavish but unsustainable lifestyle for a long time, seemingly unconcerned about whether such debts could be repaid, or worse, borrowed recklessly knowing that the debts could not be repaid in any reasonable time frame, a creditor aware of this fact would be inclined to reject your proposal. If your lifestyle included chronic addictive behaviour such as excessive gambling, drinking, or drug use, creditors would have to be convinced that the insolvency was likely caused by such behaviour.

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Before accepting an IVA, creditors would have to be satisfied that your lifestyle included chronic addictive behaviour such as excessive gambling, drinking, or drug abuse. The insolvency was likely due to such behaviour. They would also have to be satisfied that such behaviour had ceased and that you had taken reliable corrective action to maintain the changed and improved behaviour.

Incorrect financial information

Creditors assume that you are telling the truth about your present financial situation and how it came about in your IVA Proposal. They want you to be upfront, frank, and honest about your earnings, spending, assets, and obligations.

Suppose a creditor discovers that you are concealing some critical information regarding your insolvency. In that case, they will be sceptical of the IVA plan as a whole and will most likely reject it. They may, but are not obligated to, raise any concerns or questions regarding your proposal to the attention of the Insolvency Practitioner who is chairing the creditors’ meeting so that you can explain what may have been an innocent error. The creditors are free to simply reject your IVA proposal even without giving a reason.

Unrealistic IVA offer

The IVA plan should be your best effort to deal with your unsecured obligations, and the payments made to creditors must be believable and fair. Your income and expense statement should accurately reflect your current situation, and there should be no omissions or understatements when it comes to sources of income. If you work a lot of overtime regularly, increasing your take-home pay and discretionary money, your IVA petition should include this information.

Reasonable family living expenditures should be claimed, but not to the exclusion of others to maximise revenue. If you and your partner are cohabiting, home costs should be divided fairly between you and your spouse, generally pro-rata to the couples’ respective salaries. Even if your spouse is not in financial distress, creditors will want you to report your combined income and spending.

Recent Debts

The creditor’s attitude is also influenced by the creditor’s connection with the debtor. It’s not unexpected if the creditor rejects the IVA if you’re a new client with a debt that was accrued within the previous six months. If you’ve been a client for a long time, say ten years or more, and the new debt was just a consolidation of multiple previous obligations with that creditor, the creditor is more likely to accept the IVA because of their extensive knowledge of your financial history.

What happens after you have submitted an IVA proposal?

There will be a creditors’ meeting before your individual voluntary arrangement (IVA) is launched (sometimes known as a MOC). This is when your creditors will go through the IVA proposal we worked out with you. Your creditors will vote on whether or not your IVA may proceed after reviewing the plan.

The vote will begin when the creditors have been given notice of the meeting. The results of each round of votes will be examined. You will also receive a letter confirming the meeting’s date and time. In order for your IVA to be accepted, more than 75% of the creditors voting must agree to it.

Creditors may request changes to the plan at times. An increase in the monthly payments given or an extension to the period of your IVA are two examples of adjustment requests.

If the creditors accept the IVA proposal, the applicant will receive an IVA completion certificate.

What is an IVA completion certificate?

An IVA completion certificate certifies that you have successfully finished your IVA and are no longer legally bound by the conditions of your insolvency firm and creditors’ agreement.

Your Insolvency Practitioner will send you your IVA completion certificate in the form of a letter. The Insolvency Practitioner will also notify the Insolvency Service so that you can be removed from the Public Insolvency Register. However, it may take up to three months for you to be removed.

After the Insolvency Practitioner has completed the administration of your IVA, you should get your certificate within twelve weeks after the final IVA payment. If you have made all of the agreed-upon payments to your IVA, you will receive your certificate. Suppose the Insolvency Practitioner feels there are any remaining Payment Protection Insurance claims (PPI) to be paid into your IVA. In that case, your IVA may be concluded successfully with the Insolvency Practitioner acting as Trustee. The Trustee’s job is to release PPI to creditors’ benefit. You will not be required to make any additional monthly payments after an IVA has been completed successfully.


An Individual Voluntary Arrangement (IVA) proposal plays a major part in your journal towards settling your debts. It is what you use to convince your creditors that you will pay what you owe over an extended period of time. It also shows how you plan to pay them back and assures them that legal actions may be taken against you if you default.

It is best to always be honest and comprehensive when writing the proposal with your IVA drafter because your IVA proposal can make or break your application. We hope this article serves as an appropriate guide to help you pay your way to a debt-free life.

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IVA Debt Help Information

If you want to know more about the debt help plan of an IVA we have all articles related to individual voluntary arrangements here:

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An IVA is not the only debt solution you have and this is where speaking to a qualified debt advisor is very important.

After speaking to a debt consultant you might realise the best solutions are one of the following:

Make sure you take time to understand all the debt solutions available before making a decision because DMPs (aka debt management plans) are also a popular choice in the United Kingdom.