A Voluntary Arrangement is a proposal to creditors to pay off a proportion of the debts that are owed to them and they usually last up to 5 years.
The concept of a Voluntary Arrangement is that creditors would receive a more beneficial payment, than would be likely in the event that the individual becomes bankrupt.
In order for a Voluntary Arrangement to become binding, it must be accepted by 75% (in value) of the creditors. It is a flexible procedure that creditors can accept, amend or reject.
A proposal is drafted by the debtor, in practice ThorntonRones will draft it, setting out the debtors circumstances, assets and liabilities, and the manner in which it is proposed that the creditors are dealt with.
When the proposal is complete an application for an interim order will be made if needed but is no longer necessary in all cases, the interim order prohibits the commencement or continuation of any legal process against the debtor or his estate until the nominee considers the proposal to be both realistic and workable.
A vote is held to decide on whether or not to accept the proposal. 75% in value of the creditors who are present or represented must vote for the proposal for it to be accepted.
The benefits of an Individual Voluntary Arrangement
Very flexible, assets (such as your home or business) can be dealt with in ways that mean they do not have to be sold.
Avoids the stigma of bankruptcy.
You avoid being disqualified from acting as a director.
Certain employments require the debtor to be financially "responsible" and certain professions consider that bankruptcy automatically disbars the individual from acting as a qualified person of that profession.
Creditors receive a greater return than on bankruptcy