The IVA Protocol is a voluntary framework for dealing with straightforward consumer-based IVA’s.
Q. When was the IVA Protocol introduced?
The Protocol was introduced in 2008.
Q. Who does it apply to?
The Protocol applies to all debtors, creditors and insolvency practitioners.
Q. Why was the IVA Protocol introduced?
The main aim of the IVA Protocol is to increase trust and confidence between those involved whilst also helping to improve the overall efficiency of the IVA process.
Q. What are the key areas covered by the Protocol?
Some of the key areas covered by the IVA Protocol include the following:
- The start, effect, and duration of the IVA (an IVA will typically last between 4 and 5 years)
- Duties and obligations of the debtor (i.e. the need to maintain regular monthly repayments to ensure the arrangement doesn’t fail)
- Duties and obligations and powers of the supervisor (i.e. the need to conduct regular reviews – usually every 12 months – to ensure the arrangement is running to its maximum efficiency and that any changes have been noted and/or implemented in accordance with the arrangement)
- Effects of a breach or non-compliance by the debtor (i.e. failure to maintain payments either partly, or at all)
- Management of assets (for example, any vehicles, properties and so on)
- Dividends and claims
- Creditors who have not received a notice (although this should be avoided wherever possible by a thorough examination of a debtor’s commitments)
- Meetings of Creditors
- Conditions dealing with Tax Debts
Q. Where can I find out more about it?
Details of the IVA Protocol can be found on the Insolvency Service’s website.
Q. Does everyone have to adhere to the Protocol?
No. The protocol only applies to what is considered to be ‘straightforward consumer based IVA’s’. If this isn’t the case then there’s no obligation to rely on the Protocol although sometimes it can simply be used in part, depending on the individual circumstances.
Ultimately, the protocol is designed for use by insolvency practitioners who deal with IVA’s. Since the protocol uses standard wording it should save ‘re-inventing the wheel’ and simplify the entire process.
Q. Will IVA’s and/or the Protocol be affected if the UK leaves the EU without a deal?
If the UK leaves the EU without a deal then debtors might not be protected from creditors based in the EU, even if they decide to enter into an IVA. Consequently, if a debtor lives or works in the EU, then EU creditors will be able to pursue the debt (although they won’t be able to do this if the debtor goes on holiday in an EU country).
Consequently, if a debtor has property, land, vehicles or savings in an EU country then it may become necessary to seek independent legal advice. Debtors are also advised to seek legal advice if they have creditors in Switzerland, Iceland or Norway since the situation is currently quite different in these countries.
At the time of writing (April 2019), the position on Brexit is still very much to be determined but ongoing developments should certainly be taken into account.