IVA: Bliss for the Borrowers Who Have Valuable Possessions

A section of the British citizens are forced to borrow from several sources. They do so for sustenance in try time of their life. It happens that many of them cannot repay the loan amount in the stipulated time. They fail to manage their limited finance and reach on the verge of bankruptcy. This is such a condition where both the borrowers and the lenders are to lose. An alternative to bankruptcy has been devised by the British government through The Insolvency Act of 1986. This is the history of the birth of Individual Voluntary Arrangement or IVA. Individual Voluntary Arrangement provides unique options for a new beginning to the borrowers who are sure to be dipped into bankruptcy. Merits of Individual Voluntary Arrangement are the following: a) Individual Voluntary Arrangement helps the borrower paying back a part of the loan amount with which the lender agrees. b) The lender can no more disturb the borrower, and any such action from the part of the lender will be treated as violation of law. c) Interest for the previous loans is declared frozen. As a result of this, loan amount will not increase any more. d) Professional status of the borrower will not be disturbed as it could have been if bankruptcy is declared. Demerits of Individual Voluntary Arrangement are the following: a) The borrower must abide by the terms of the Individual Voluntary Arrangement; otherwise the lender may make him bankrupt with the advice of the insolvency practitioner. b) The financial status of the borrower may slide down for any reason and the insolvency practitioner may not succeed in preparing any fresh agreement if the lender do not ant to co-operate. It is the task of the insolvency practitioner to prepare the Individual Voluntary Arrangement. He receives all necessary documents from the borrower and from the lender. He prepares an agreement for the two sides illustrating how both of them will be benefitted. Next, the borrower seeks an interim order from the court. Once the court grants the interim order, the lender will have to honor it. This means that he cannot proceed with bankruptcy petition. He will have to accept the proposal of the court, and he can also reject it. When the lender accepts the proposal, the insolvency practitioner begins to frame the agreement which will be binding for both sides. Individual Voluntary Arrangement is bliss for the borrowers who have valuable possessions which they would sure to lose.