How it works?
Self-employed IVAs are very similar to normal Individual Voluntary Arrangements. They follow the same principle – but the application process is a little different, as they have to accommodate your business and cash-flow.
This guide provides you with an in-depth look at the self-employed IVA process.
If you’re struggling with your debts and think a self-employed IVA could be right for you, get in touch with PayPlan. We can help you understand all your options.
Call us on 0800 280 2816 or use our online form to request a call back >>>
Going through your options
In order to consider setting up a self-employed IVA for you, we will first need to collect details of the amounts you owe and the assets you own.
We will also need details of your income and expenditure, so we can work out how much you can afford to pay to your unsecured creditors each month.
We basically gather as much information as we can about you and your finances, so we can advise you what your best debt solution options are.
Don’t worry if your business income fluctuates and you can’t afford to commit to a regular fixed monthly payment amount. Our self-employed IVA monthly payments can be flexible, taking into account any seasonal fluctuations in your income.
Before we refer you to our associated company PayPlan Bespoke Solutions Limited to set up your self-employed IVA, we will check to make sure it’s the right option for you.
We will discuss the pros and cons of all your available debt solutions – including the effect on you, your business and your future finances. That allows you to confidently decide which is the best option for you.
If you decide that a self-employed IVA is the right option for you, we will also consider your business debts, turnover and expenses – and help you complete a cash-flow projection for the next 12 months.
This will help show your creditors that your proposed monthly IVA payments are affordable, and that your self-employed IVA has a good chance of being successfully completed.
You will be able to use this cash-flow as your business budget for the following year.
The self-employed IVA proposal
After collecting details of your finances and assessing your situation, we will refer you to our associated company PayPlan Bespoke Solutions Limited, who specialise in setting up self-employed IVAs.
They will offer to meet you in person to go through your debt solution options and discuss your business cash-flow.
You don’t have to agree to this proposal but it’s a good chance to ask any questions about your financial situation. Alternatively, this can be discussed over the phone, if that suits you better.
In order to propose a self-employed IVA, certain items will need to be verified, to check that all the information contained in your self-employed IVA proposal is correct.
Typical information that’s needed is:
- Your business cash-flow projection for the next 12 months
- Your business profit and loss accounts for the past year
- A copy of your tax return for last year
- An online valuation of your home (and any other properties you own)
- A copy of your latest mortgage statement – and any secured loan statement(s), if applicable – to show your creditors the equity position in your property(ies)
- Copies of all recent correspondence from your personal and business creditors – so we can get your account numbers, creditor contact details and latest outstanding balances
About the Insolvency Practitioner
In order to propose a self-employed IVA to your creditors, you’ll need to use the services of a licensed Insolvency Practitioner (IP). IP’s are quite often accountants or solicitors who have many years of experience in assisting people in financial difficulty.
Your self-employed IVA proposal will be prepared by a certified IP and their supporting staff. Once you have signed your proposal, the IP will assume the role of Nominee, and report on whether they think your self-employed IVA is viable option.
The Nominee must report on whether or not:
- Your financial position is as you have stated in your proposal
- The IVA is fair for both parties (i.e. you and your creditors)
- The IVA has a good chance of being successfully completed
If the Nominee agrees that the self-employed IVA is viable, they will become the Supervisor for your arrangement, and ensure the agreement is carried out as agreed.
The supervisor must keep a receipts and payments account, which lists all the money received into the arrangement, and where it has been distributed to.
Once a year, the Supervisor must compile a report on the progress of your IVA, which includes a copy of the receipts and payments account. This report must be sent to you and all your creditors.
It’s really important that you can continue to run your business while you’re in your self-employed IVA, so the proposal will allow you to carry on using essential trade suppliers and credit lines.
We understand the importance of continuing to trade in order to protect your livelihood. This also gives your creditors the best chance of getting a good return on the amount they are owed.
If any of your personal or business creditors are taking legal action against you, your IVA Supervisor can help you apply to the Court for an Interim Order. This prevents any of your creditors from starting – or continuing – any legal action before your IVA proposal is voted on by your creditors.
If your IVA is accepted, your unsecured creditors are legally prevented from taking any further action against you to recover what you owe them.
About the creditors’ meeting
Your creditors will have a meeting to discuss your self-employed IVA proposal. You won’t have to attend – you just need to be readily available by phone so you can be informed of the decision. Your IP will represent you at the meeting.
At least 75% of the creditors (who attend the meeting) must vote in favour, in order to for your self-employed IVA proposal to be accepted. You’ll be in good hands however, as PayPlan Bespoke Solutions Limited have an average success rate of 80-85% acceptance by creditors.
It is likely that your creditors will accept a self-employed IVA as – unlike with some other debt solutions like bankruptcy – you will be paying a proportion of your debt back to them.
What if your creditors don’t approve your proposal?
In the unlikely event that your self-employed IVA proposal is rejected by your creditors, you won’t necessarily have to go bankrupt. We can discuss alternative debt solution options with you, for example:
- Propose another IVA – Your creditors should give reasons for rejecting your IVA. If you can overcome these objections, it may be possible to propose another self-employed IVA which might be more acceptable to your creditors
- Set-up a Debt Management Plan (DMP) – This would allow you to repay your debts in full via affordable monthly repayments over a longer period of time. However, in a DMP there is no guarantee that interest & charges will be frozen, and it will probably take you much longer to repay your debts. It may be possible to set-up a DMP now, and then propose another self-employed IVA in the future, if your situation changes and you can persuade your creditors to accept an IVA at that time
- Petition for your own bankruptcy – If you wish, you could decide to declare yourself bankrupt
If your self-employed IVA is rejected, it is very important that you discuss your alternative options with us as soon as possible. If you do nothing, your creditors may lose patience with you and petition for your bankruptcy.