What is a business IVA?
A business IVA is a legal agreement between you and your unsecured creditors where you will pay back what you can reasonably afford each month, typically for a period of five years and in return, your creditors will agree to freeze interest, stop any impeding legal actions and write off the balance of any unpaid debts.
The legal status of your business determines which type of business IVA is appropriate for your situation. If you are a Sole Trader (self employed), then any unsecured debts that have been generated as a result of trading can be included in an IVA; they are treated no differently to your unsecured personal debts. IVAs were in fact, originally intended as a mechanism for dealing with ‘business generated’ personal insolvency rather than consumer debt, which is what they’ve more recently become synonymous with.
If the business is a partnership or limited liability company then a Partnership Voluntary Arrangement (PVA) or Company Voluntary Arrangement (CVA) may be appropriate. You must be able to demonstrate that the VA offers more value to the creditors than liquidation, that the business model and future estimated earnings are viable and that you have sufficient working capital to continue trading.
Unfortunately, whilst the charity can offer IVA advice to Sole Traders, it cannot give advice on PVAs or CVAs.
Debt Advice Foundation is a registered UK charity offering free, confidential support and advice on any aspect of debt, including business IVAs. If you need to talk to someone about debt, please call the charity’s helpline on 0800 043 40 50 to speak to an adviser.