IVA Considerations for the Self-Employed

Entering into an IVA while self-employed is possible, but there are distinct aspects to consider. One key difference is the flexibility of contributions. As a self-employed individual, your income may fluctuate monthly, so your IVA payments can be adjusted accordingly. A cash-flow statement is necessary to inform your Insolvency Practitioner (IP) of these income variations. It’s crucial to maintain communication with your IP and notify them of any changes in your financial situation.

Regarding business-related credit, being in an IVA limits your access to it. However, for self-employed individuals, there may be some flexibility. You will still require your IP’s approval to obtain more than £500 of credit, but it might be possible to exclude a specific line of business credit from your IVA and repay it separately, allowing you to maintain a working relationship.

Lastly, concerning business bank accounts, if your account is overdrawn but needed for managing business expenses, you may be allowed to keep it. However, if the overdraft is substantial, including it in your IVA agreement could be a wiser decision. Be aware that if you have other credit lines with the same bank, they may exercise the ‘right to offset,’ seizing funds from your business account to cover other debts. In such cases, opening a new business account and including the old one in your IVA is typically the most suitable option.

Self-employed IVAs and your Assets

An Individual Voluntary Arrangement (IVA) offers a significant benefit over bankruptcy, as it allows you to retain your assets, including your property if you own a home. In most cases, a self-employed IVA enables you to keep all of your assets, making it an ideal solution for business owners seeking to repay their debts with minimal disruption to their trading activities.

However, there are a few exceptions to consider. Although IVAs were initially designed for business owners, there may be instances where selling some assets is necessary. By carefully evaluating your financial situation and understanding the terms of your IVA, you can make informed decisions about your assets and ensure a smoother debt repayment process.

A self-employed IVA provides a more favorable option for business owners compared to bankruptcy, as it allows for the retention of assets in most cases. While there may be exceptions requiring the sale of certain assets, understanding the specifics of your IVA can help you navigate these situations effectively and maintain the stability of your business during the debt repayment process.

Personal Assets

IVAs are designed to safeguard personal assets, including vehicles. In exceptional circumstances, you may be required to sell a high-value vehicle. However, if you can demonstrate its necessity for your work, particularly if you are self-employed, you may retain it or opt for a more affordable alternative. For low-value vehicles, it is unlikely you will be asked to sell, as the proceeds from the sale may not significantly benefit creditors after accounting for administrative costs. Seek debt assistance to explore your options further.

In summary, starting a business while in an IVA is possible, but it is essential to consider the impact on your personal assets. An IVA can offer protection for necessary assets, such as work-related vehicles, but you may be required to sell or replace high-value items. Low-value vehicles are typically exempt from this requirement, as the potential financial gain for creditors may be minimal. It is advisable to consult a debt expert to ensure you make informed decisions about your assets during the IVA process.

Where can I get more advice on IVA’s and other debt solutions?

Starting a business while in an Individual Voluntary Arrangement (IVA) is possible, but it requires careful planning and consideration. An IVA is a legally binding agreement between a debtor and their creditors, designed to help repay debts over a fixed period, usually five years. It’s essential to understand the potential challenges and restrictions associated with starting a business under these circumstances.

Firstly, obtaining financing for your new venture may be difficult, as lenders may be hesitant to provide loans to individuals with an IVA. Additionally, the terms of your IVA may limit the amount of credit you can access. It’s crucial to discuss your plans with your Insolvency Practitioner (IP), who will help you navigate the process and ensure compliance with your IVA terms.

Secondly, managing your finances is vital to the success of your business and maintaining your IVA. Proper budgeting and financial planning can help you avoid further debt and ensure your business remains viable. It’s also essential to keep your personal and business finances separate to avoid complications.

For more advice on starting a business while in an IVA and exploring other debt solutions, consider seeking professional guidance. Contact a reputable insolvency helpline or consult with an IP to discuss your options and receive the support needed to manage your debt effectively. Remember, it’s crucial to make informed decisions and be aware of the potential risks and benefits associated with starting a business during an IVA.