INSOLVENCY SERVICE
News Release (Ins/Coms/49) issued by The Government News Network on
29 January 2008
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.
Ends