Glossary of IVA terms
Here is a list of common terms and words you’re likely to come across if you decide to proceed with an IVA application – along with handy definitions to help you further understand how an IVA works…
| Term | Definition |
|---|---|
| IVA | IVA stands for Individual Voluntary Arrangement. It is a type of debt solution that could help you to become debt free in just 5 years. For more information see our what is an IVA? page |
| Interim Order | An Interim Order is a court order that can be taken out during the IVA application process to stop your creditors from taking any legal action against you. It protects you from the threat of further issues while your arrangement is proposed and agreed |
| Self-employed IVA | A self-employed IVA is just like a normal IVA, but it is specifically designed for self-employed people, and anyone else who completes a self-assessment tax return. It offers a viable alternative to bankruptcy, and allows you to keep your business up-and-running |
| Bespoke IVA | A Bespoke IVA is just like a normal IVA, but it is often tailored to allow for specific circumstances. An example would be a trader who needs to prioritise repayments to certain creditors (for example, suppliers of essential ongoing business services) in order to keep on trading |
| Bankruptcy | Bankruptcy is a type of debt solution that is usually seen as a last resort. It is a legal insolvency solution whereby all the debtor’s significant assets will probably be sold to repay as much as possible of their debts. You can find more information about bankruptcy (and how it compares to an IVA) here |
| DMP | DMP stands for Debt Management Plan. It is an informal agreement between you and your creditors whereby you repay all of your debts but over a longer period in affordable monthly repayment. You can find more information about DMPs (and how they compare to an IVA) here |
| Trust Deed | A Trust Deed is a debt solution that is only available to residents of Scotland. It is broadly similar to an IVA, but IVAs are only available to residents of England, Wales and Northern Ireland. You can find more information about Trust Deeds (and how they compare to an IVA) here |
| Full & Final Settlement | If you have a lump sum available that is not enough to repay your debts in full, you could make a‘full and final settlement’ offer to your creditor. If your creditor accepts the offer (and they are not obliged to), you pay them a lump sum straightaway and, in return, they agree to write off the remainder of what you owe them |
| Insolvency Practitioner | Insolvency Practitioners (IPs) are the only people legally allowed to propose and supervise IVAs. They administer the IVA throughout, and act as the ‘middle man’ between you and your creditors |
| CVA | CVA stands for Company Voluntary Arrangement. This is similar to an IVA, but is a debt agreement between a company and its creditors to repay the company’s debts |
| PVA | PVA stands for Partnership Voluntary Arrangement. This is similar to an IVA, but is a debt agreement between a partnership and its creditors to repay the partnership’s debts |
| Insolvency Act 1986 | The Insolvency Act (1986) is the main legislation governing all insolvency debt solutions, including IVAs and bankruptcy |
| Insolvency | Insolvency is when a person is incapable of paying back all their debts. IVAs and bankruptcy are an insolvency debt solution |
| Charging Order | This is a legal order which turns an unsecured debt into a secured debt, by securing it against the debtor’s property. It is then possible for the creditor to apply for an order for sale of the debtor’s property, so that the debt is repaid |
| IVA Adviser | An IVA Adviser is an experienced professional – not necessarily an IP – who can offer help and advice to someone considering entering an IVA. At PayPlan, we offer FREE debt advice to all our customers, and we always consider all possible solutions before recommending the most suitable one for the customer’s personal and financial circumstances |
| IVA Chairman | The IVA Chairman is the person who chairs the meeting of your creditors to vote on your IVA proposal. The chairman may – or may not -be the IP |
| IVA Supervisor | This is the person who looks after and adminsters your IVA. This is typically your IP |
| Preferential creditor | Preferential creditors are those who are paid in full before your unsecured creditors receive any monies from your IVA. Nowadays, few creditors are classed as preferential |
| Arrears | This is any money you owe which you haven’t repaid on time, in accordance with the original credit/loan agreement |
| Assets | These are any items owned by the debtor that may be of value. Assets might typically include vehicles, property, and any financial assets – like stocks or shares |
| Joint & Several Liability | This is where two people have taken out a loan or credit jointly in both their names. Both people are jointly and severally liable for the debt. This means that the creditor can chase both people jointly and individually for the money |
| Proof of Debt form | This is a form that your creditors will be asked to complete and return to your IP to prove that you owe them money, and how much |
| Secured debt | This is any money that has been borrowed against an asset. The most common secured debts are those which are secured against your home (or any other property you own) – for example mortgages and secured loans. If you default on your secured debts, the creditor could require you to sell the asset to repay the debt |
| Unsecured debt | This is any money that has been borrowed without it being secured against any asset. Typically, unsecured debts are in the form of credit cards, personal loans, bank loans, overdrafts, store cards, catalogue and mail order accounts, etc. |
| Time Order | A Time Order can be used by the Court to make changes to the terms of your original contract with a creditor. They might use this – for example – if your creditor refuses to freeze interest and charges on your debt |
| Creditors Meeting | This is a meeting of all your creditors to vote on whether or not to accept your IVA proposal. Your creditors don’t normally attend this meeting – it is normally conducted with you via telephone |