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An IVA is an agreement with your creditors for paying all or part of your debts. You agree to pay regularly an insolvency practitioner, who will split that money among your creditors.

An IVA can be adaptable to meet your requirements but it can be costly and risky. Debt suffering is such a daunting experience, with the extra burden of managing your own business.

You feel that you have to work so that your company may continue trading, yet you are worried. First of all, there are many ways to help and you have no chance to lose your business.

If you are investigating an IVA as a solution to unmanageable debt, you will want to know how this will affect your business positively.

Will an IVA affect my business?

 

You should certainly not ignore your debts and creditors anymore. The debt collectors will unfortunately continue to contact you for money.

Of course, you won’t go to prison for not being able to afford your debts, but you may be taken to court and significant assets like your home may be lost.

The main advantage of an IVA is that you can continue trading in your firm, but it might not be the case with other debt solutions.

For instance, you are not able to manage a limited company in bankruptcy and may need to sell the instruments required for your business.

We have gathered real-life examples to help you understand how you can keep your business going.

1. If you’re self-employed

You know, your finances and your business finances are mixed up if you are a self-employed person. This makes debt particularly difficult, as the law sees your business debts as equal to your debts.

Getting IVA while you’re self-employed, means that you can continue trading. Normally your creditors will have no difficulty accepting your own IVA if your company makes a profit.

They are going to earn more money from you if you went bankrupt or tried to take you to court (Don’t worry, you can’t go to prison for being unable to pay your debts).

Your Insolvency Practitioner (IP) will look at your corporate and personal debt as well as forecast your cash flow, income, and outgoings for your company.

This will allow your creditors to show that your company is viable and IVA repayments can be paid.

In truth, IVAs were meant as a method to deal with personal insolvency “corporate” instead of the debt of the consumer.

2. If you’re in partnership

If the business is a partnership, Partnership Voluntary Arrangement (PVA) may be acceptable. It will be useful if you are personally chased for debts by your company because it provides you with legal protection against creditors.

Furthermore, an IVA protects your assets from the creditors of the partnership.

The Financial situation on an IVA

Your IP will be expecting and aware of your revenues changing month to month if you operate your own company. Indeed, self-employed IVAs are purposefully established to recognize revenue flows during self-employment.

Make sure you notify your IP quickly if you cannot handle your IVA payments, perhaps because your business is struggling. You can negotiate cheaper payments and so maintain your IVA.

Can I start a business with an IVA?

We examined how your existing business will be affected by an IVA, so why not start a new one? You can start your own business with an IVA. Now that we have covered all the facts on how your business is affected by an IVA, we hope you found it useful.

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Robin Hood

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