Self-employed IVA

A self-employed IVA (Individual Voluntary Arrangement) is a legally binding agreement between you and your creditors. It helps you avoid bankruptcy by paying off part of your debt over a fixed period of time.

At the end of the period (usually around five to six years) and providing you keep to your agreed repayment schedule, your creditors will agree to write off the outstanding balance of your unsecured debt.

When you’re self-employed, this kind of arrangement is an effective alternative to bankruptcy. It’s easier for you to continue to trade, without the restrictions imposed by bankruptcy as well as retain your assets.

You make one affordable monthly payment to an Insolvency Practitioner (IP) who will then make payments to your creditors. You could be debt-free in as little as 5 years, with a significant amount of your business and personal debt written off. There’ll be no more threats of legal action, no more chasing from your creditors and no interest added.

You will need to keep to a budget, but your business and personal debts will all be taken care of – and you’ll still have enough money left over to run your home and business, buy clothes and food for you and your family, and keep up to date with all your essential outgoings.

How do I apply for a self-employed IVA?

Your IP will help you put together a forward-looking business cash-flow for the next twelve months, projecting the income and expenditure of the business.

This will show your creditors that the business is profitable and you are able to make reduced monthly payments to them. Your monthly income from the business after tax will then be used to pay your personal living costs, with the amount left over being the amount of money that you can afford to pay the IVA each month.

These payments can be flexible, taking into account any seasonal fluctuations in income. For example, if you’re a gardener and receive most of your income in the summer months and not as much in the winter months, then you can make payments to your IVA as and when you receive your income, providing you pay in the agreed amount over the course of a year.

Advantages

You can keep trading, using suppliers and lines of credit
You can hold on to any tools, machinery and stock that you need for your business
You can structure repayments to suit your cash flow
Interest and charges will be frozen
You make a single monthly payment
Set up fees are included in your monthly payment
No legal action
Your business assets are protected
Your home will be safe
An IVA is easy to set up with the support of your IP
You will usually pay back less than the full amount you owe