Interlocking IVAs
Voluntary Arrangements for Individuals in Partnerships
Operating a partnership can be stressful especially if it has debt problems. Debts can
accumulate for a range of reasons; bad debts, lost contracts, or just poor financial
control. The debts may be a combination of business and personal, as often personal
loans and credit card debt is accrued trying to support the business.
Voluntary Arrangements can be used in a number of ways:-
Arrangements based on contributions
The most common IVA involves the individual retaining his or her business assets but
instead offering to pay monthly contributions out of future earnings over a fixed period
of time, usually 5 years. Where there is a personal property with equity, creditors will
expect that a sum is introduced at the end of the arrangement in place of a share of
the trader's equity.
Partners can propose interlocking IVA's which essentially provide for the partners to
make one monthly contribution to settle all debts irrespective of whether the debts are
in either partner's name or owed jointly.
Arrangements based on a full and final settlement
Generally these types of arrangements offer creditors a lump sum to settle their debts.
For example:-
Helen and Adam are publicans and have around £40,000 of debt consisting of Inland
Revenue Self Assessment tax, loans and credit cards. They have a property which is
rented out and will generate around £25,000 if sold. They have increased trade at the
pub which is now operating profitably. Their income can now cover future trading
expenses but is insufficient to cover debt repayments.
Solution
The partners can put forward full and final interlocking IVA's offering creditors a lump
sum of £25,000 to settle debts of £40,000. After costs creditors would receive around
50p in the £.
To find the best solution for you Contact Simply Debt Solutions or Send Your Details to
The Debt Advisor today.
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