Can Self-Employed People Apply for IVAs?
A self-employed individual could have personal debt but - as a sole-trader - might have business debts as well. In the UK debt world, a query that is often asked is whether or not they fall under the classification of needing an Individual Voluntary Arrangement (IVA) or a Company Voluntary Arrangement (CVA).
There are two types of Voluntary Arrangements applicable to people in debt in Britain: CVAs (Company Voluntary Arrangements) and IVAs (Individual Voluntary Arrangements). They can be seen as an alternative option to bankruptcy and - as the names convey - one is appropriate for personal debt whilst the other is appropriate for business/company debt. For this reason, it is sometimes confusing to establish whether a 'one man band' or sole-trader - i.e. somebody that is self-employed - should opt for an IVA or a CVA.
The answer's an IVA: whilst a company as a whole is liable for its own debts, a self-employed person's business debts are the lone responsibility of said person. On top of that, in an attempt to keep the business rolling and active, which is very much the case with a lot of businesses suffering and struggling during the present economic climate, the self-employed person may need to get personal credit cards and loans in their name in order to assist the business.
However, the fact that self-employed people can opt for IVAs doesn't necessarily mean that they suit the criteria as simply as that and can just go out and grab one, as determinants depending on the person's situation will figure into it as well. A substantial factor for a self-employed person getting an IVA is that they need to be able to show their creditors that they are able to keep their business going and to survive past the debts, if they are able to apply for an IVA. In reality, if they can argue that the creditors will favour from an IVA, in that they'll get some of their money paid back rather than none at all, then sure enough the creditors are more likely to agree to their self-employed debtor to start an IVA.
The IVA will mean that the self-employed individual is able to consolidate their debt into one single payment, going on for up to five years. Depending on the agreed terms, creditors will be given so many pence to the pound, for example 25p per . This'll make it less difficult for the sole-trader to pay off their debts while also being able to concentrate on helping their business to get back in the black and back on track.
There are two types of Voluntary Arrangements applicable to people in debt in Britain: CVAs (Company Voluntary Arrangements) and IVAs (Individual Voluntary Arrangements). They can be seen as an alternative option to bankruptcy and - as the names convey - one is appropriate for personal debt whilst the other is appropriate for business/company debt. For this reason, it is sometimes confusing to establish whether a 'one man band' or sole-trader - i.e. somebody that is self-employed - should opt for an IVA or a CVA.
The answer's an IVA: whilst a company as a whole is liable for its own debts, a self-employed person's business debts are the lone responsibility of said person. On top of that, in an attempt to keep the business rolling and active, which is very much the case with a lot of businesses suffering and struggling during the present economic climate, the self-employed person may need to get personal credit cards and loans in their name in order to assist the business.
However, the fact that self-employed people can opt for IVAs doesn't necessarily mean that they suit the criteria as simply as that and can just go out and grab one, as determinants depending on the person's situation will figure into it as well. A substantial factor for a self-employed person getting an IVA is that they need to be able to show their creditors that they are able to keep their business going and to survive past the debts, if they are able to apply for an IVA. In reality, if they can argue that the creditors will favour from an IVA, in that they'll get some of their money paid back rather than none at all, then sure enough the creditors are more likely to agree to their self-employed debtor to start an IVA.
The IVA will mean that the self-employed individual is able to consolidate their debt into one single payment, going on for up to five years. Depending on the agreed terms, creditors will be given so many pence to the pound, for example 25p per . This'll make it less difficult for the sole-trader to pay off their debts while also being able to concentrate on helping their business to get back in the black and back on track.
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