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Agreement reached for IVA protocol
A voluntary code of conduct has been agreed today with the organisations and bodies involved in managing and agreeing individual voluntary arrangements (IVAs) following a series of discussions and negotiations facilitated by The Insolvency Service.
IVAs allow people with debts to manage their debts effectively by paying off an agreed sum to their creditors over a period of generally five years. The voluntary code ensures the processes involved which lead to an IVA will be more transparent and includes standard terms and conditions, greater certainty on dealing with a debtor's home and greater reassurance for creditors and debtors that the best option has been presented.
The protocol means IVAs will continue to provide debt relief for individuals in financial distress as all parties agree to openly disclose relevant matters and work to a standard framework which applies to both providers and creditors.
Patrick McFadden, Minister of State for Employment Relations and Postal Affairs said
"The Insolvency Service has facilitated a process which has successfully produced a voluntary code for IVAs to reflect the changing needs of the market. It will provide greater transparency for creditors and debtors alike by using standard clauses and a consistent format. Today's protocol is a significant achievement for everyone involved.."
A full copy of the protocol can be found on the Insolvency Service website.
Notes to editors
1. Individual Voluntary Arrangements (IVAs) established in 1986, are an alternative to bankruptcy aimed at individuals who have assets or income (or both) to repay at least some of their debt, resulting in significantly higher returns to creditors than bankruptcy.
2. The debtor puts a proposal to creditors and at least 75% by value of their creditors have to vote in favour for the proposal to be approved. If approved, the proposal is supervised by a licensed Insolvency Practitioner. Prior to approval, the creditors may put forward modifications to the proposal.
3.The protocol work stems from a working party set up in 2004. That working party identified a number of desirable reforms to IVAs, some of which needed legislative change, and some of which could be best dealt with by means of industry wide best practice protocols. The agreement reached today implements these best practice principles.
4. Patrick McFadden is also minister of state for The Insolvency Service.
5. Further information about the work of The Insolvency Service is available from http://www.insolvency.gov.uk.