The Compendium

A person suitable for a protocol consumer IVA is likely to:

• be in receipt of a regular sustainable income; for example, but not limited to, from employment or a regular pension;
• have several lines of credit or types of debt;
• have uncomplicated assets.

The age and debt level of the consumer should not create a barrier but may impact on the overall viability and suitability of any proposed IVA.

It is accepted that an IVA is a regulated process under statute, which requires certain work to be undertaken, and which may have a cost unconnected with the debt and/or number of creditors of the IVA.

IVAs are unlikely to be suitable for consumers with very low levels of debt.

Consumers who meet the criteria for a debt relief order may not be suitable for an IVA. Consideration should be given to the suitability of an IVA for consumers with debts below £5,000 and the reasons the consumer chooses an IVA, rather than other available debt relief or compromise options, should be clearly documented in the proposal.

The following are indicators that a person’s circumstances are unsuitable for this protocol:

• Disputed debts – there should be no known material disputes in relation to the debts.
• Investment properties – those with investment properties would not be suitable for a protocol consumer IVA.
• The possibility of lump sum settlement through a gift.
• Sole trader with trade debts.

Consumers should be provided with a copy of this IVA protocol before the proposal is drafted. This can be either through provision of a physical copy or providing an electronic link. Consumers’ attention should be drawn to their duties to disclose information.

[See ‘Individual Voluntary Arrangement’, ‘IVA’ and ‘Insolvency Practitioner’.]