IVAs are handled by Insolvency Practitioners (or IP’s), who have a responsibility to make them as secure as possible. If an IVA does fail, you will be left exposed to legal action from your creditors regarding the debts that were included in it. However there are a number of measures in place to reduce the possibility of this happening.
The first measure your IP will take in trying to ensure its success, is making sure the proposal is a good one to begin with.
When you first explore an IVA, your IP will help you to work out what payments you can realistically afford. This decision is often vital to the success of an IVA, and should be thought about extremely carefully. If the proposal is well though out, it is far more likely that you will manage to keep to it throughout the term.
Even in the best of circumstances, it’s impossible to know exactly what your financial situation is going to be at any time. This is why IVAs have a certain degree of flexibility within them.
Your IP will be responsible for keeping an eye on how the arrangement is panning out, and on how well you are managing to make the payments. If at any time you find you are struggling with the payments, speak to your IP immediately and give them a good chance to help you.
If your IP thinks that your circumstances have changed sufficiently they make suggest making changes to the arrangement. If things have changed for the better, they may in fact put forward increasing the payments, and if they have changed for the worse there are other options that they can explore.
Your IP will be able to negotiate with your creditors, and can sometimes arrange reduced terms or even payment holidays in certain circumstances. Failing to keep up with your payments therefore does not necessarily mean the end for the IVA. As long as you keep your IP informed, they will be able to act quickly to protect the arrangement and keep you on the right track.